County Administrator’s recommended FY 2026 budget provides stability in era of uncertainty

County Administrator’s recommended FY 2026 budget provides stability in era of uncertainty

PIMA COUNTY April 25, 2025 – County Administrator Jan Lesher’s recommended fiscal year 2026 budget, sent to the Board of Supervisors today, seeks to provide a stable financial foundation for next fiscal year while meeting all of the Board’s funding priorities. Federal government fiscal policy volatility, state cost shifts, the unfinished state budget, and ominous warnings about an economic downturn weighed on Lesher and County budget writers while crafting the Recommended Budget. To ensure financial stability and meet all County needs, the recommended $1.76 billion budget includes a 2.5% increase in the total County property tax rate.

“The Recommended Budget for FY 2025/26 represents a strategic approach to financial management, blending continuing and expanded initiatives with fiscal prudence,” Lesher told the board in her budget submittal memo. “It reflects our commitment to maintaining stability for County residents and employees while maintaining a solid financial foundation. This process involved scrutinizing expenses, exploring avenues for revenue enhancement, and reassessing the County's spending priorities.”

The increase is only the second time in the past seven years the County Administrator has asked the Board to raise the overall property tax rate. Since the Great Recession, the County has seen 11 straight years of economic growth and increased property values. Over that time, the increase in values and paid off County debt has allowed the Board to lower the overall county property tax rate. Even with the proposed increase, the overall tax rate is still 36 cents less than it was seven years ago. That equates to hundreds of millions of dollars in avoided property taxes for property owners thanks to conservative County budgeting.

The Recommended Budget funds the Board’s adopted priorities:

• Stable county operations and conservative budgeting;
• Maintaining County workforce competitiveness;
• Building and maintaining critical infrastructure;
• Maintaining important community programs that address early education, housing, and climate change.

There are two components to County property taxes – a property’s assessed value and the tax rate. Using formulas set by state law, rates for the different County property taxes are multiplied by the assessed value to determine the tax bill. The County imposes four types of property taxes, the Primary property tax, which funds the General Fund; the Library District, revenue from which can only be used for the Library; the Regional Flood Control District, which can only be used to fund RFCD infrastructure, programs, and administration; and the Debt Service tax which repays borrowed funds.

For FY26, Lesher is proposing an increase of 3.65-cents per $100 of net assessed value to the primary property tax rate to maintain critical County operations, programs, and services. She’s also recommending a 9.44-cents increase to comply with a Board policy that segregates the costs of state cost shifts. Because the state has shifted millions of dollars of state costs to the counties, Board of Supervisors policy requires those costs to be included in the tax rate. Those costs account for 72% of the proposed tax rate increase. Negligible hundredths-of-a-cent increases for the Library and Flood Control districts, small PAYGO infrastructure and services funding increases, and a 1-cent reduction of the Debt Service tax make up the balance of the total proposed County property tax rate of $5.2317 per $100 of net assessed value.

Under the tax rate proposed in the Recommended Budget, the average increase in County property tax bills next fiscal year for a single-family home would be about $94. The median increase would be about $83, which means half of homeowners would see an increase less than $83 next year, depending on their home valuation. If not for the state costs shifts, the 3.65-cent increase for critical County operations would only cost the average homeowner $8.43 next year. The County is only one of many property taxing jurisdictions in Pima County. Property owners may see other increases in property tax bills depending on their valuation and in which of the other property taxing jurisdictions they may live.

Average and Median Home Values

Proposed FY 2026 Property Tax Rates

The Board is expected to discuss and adopt the Tentative Budget at its meeting May 20. The Tentative Budget caps the expenditures for FY26. The Board can still make changes to the budget before or during final budget adoption, which is anticipated for the June 17 Board meeting, but it can’t increase expenditures beyond what it approves May 20.

Recommended Budget Highlights

Affordable Housing – The Recommended Budget continues to provide funds to encourage or underwrite increased affordable housing in the County.

Road Repair – The County’s effort to fix all of the unincorporated County’s roads in 10 years continues into its seventh year with $26 million proposed for pavement preservation. Since the program started in FY 2019, the Department of Transportation has spent more $340 million and fixed more than 1,000 miles of unincorporated County roads.

Capital Improvements – Sewer system improvements and line extensions, library renovations and improvements, flood control improvements, important road corridor upgrades, parks improvements, and improvements to aging County facilities are among the more than $200 million in Capital Improvement Projects in the Recommended Budget.

Early Education – The budget will transition funding for the popular and successful Pima Early Education Program scholarships (PEEPs) from expiring federal grants to the County Library. This will ensure pre-school children in qualifying families are able to receive essential early education, which studies have shown significantly increases chances of educational and professional attainment in adulthood.

Eviction Assistance – The County established a fund to aid people in danger of being evicted during the pandemic and the Board has continued the important program since. Keeping people housed is an essential tool in the effort to reduce rates of homelessness in the County and helps meet the goals of the Board’s Prosperity and Housing initiatives.

Competitive Workforce – As inflation eats away at County staff salaries, the County Administrator is recommending a split 5% pay increase for employees, with 3.6% in July and the balance of 1.4% after Jan. 1, 2026. The pay increase will keep County compensation rates competitive with peer employers in the region and state, which is one of goals set by the Board in the massive overhaul of the County’s Classification and Compensation Plan that went into effect two years ago.

Change to Budget Reserve Percentage – County Policy requires 17% of the County General Fund be reserved. This reserve fund helps maintain the County’s stellar credit rating, which saves taxpayers money on borrowed funds needed to build County infrastructure. And it provides a safety net in case of disasters or economic calamity. The Recommended Budget suggests lowering the reserve to 15% and making more money available in the budget for County programs.

Addressing Federal Policy Volatility - The past several months has seen federally funded programs in the County subjected to stop-and-start funding notices as federal policies change abruptly, whether due to changes in policy, reversing of those changes, or legal action. The County Administrator is recommending any savings in County spending in the last quarter of the fiscal year be set aside in case the savings are needed to fill gaps due to federal funding changes.

To read the Recommended Budget, go to pima.gov/budget