Council approves Fiscal Year 2026 Quarter 3 budget adjustments
By Molly Ann Howell
Managing Editor
Every quarter, the City of Gallup’s Finance Department reviews budget changes and submits them to the City Council for approval. During this review, staff examine personnel, operations, capital outlay, and transfers into and out of each fund.
Typically, the council approves these items via the consent agenda. However, during the April 28 meeting, CFO Patty Holland presented several items for discussion to clarify the state’s Department of Finance and Administration requirements for municipalities.
The DFA requires the council to pass resolutions for all budget increases, decreases, and fund transfers. Furthermore, the agency mandates approval of an «actuals» report showing cumulative activity for the fiscal year. Because the report to the DFA was due April 30, the timing of this discussion was critical.
During the third quarter of Fiscal Year 2026, the City of Gallup held four funds with negative cash balances totaling $6.4 million. To resolve this, the city must provide temporary cash transfers from the general fund.
Holland noted that negative balances often occur when the city awaits reimbursement for a grant. To manage this gap, the city uses temporary loans to subsidize the affected funds. She illustrated this process by using the example of purchasing a «widget.»
“If I spend $100,000 to buy widgets through a grant, and the money hasn’t arrived by the end of the quarter, we issue a temporary loan,” Holland explained. “That is part of the approval process.”
If the process fails, however, and the city doesn’t receive the $100,000 reimbursement, Holland and her team must alert the city council. In that event, they ask the council to permanently transfer funds to replenish the expenditure.
| Grant | Amount |
| Senior Citizens (219) | $3, 500, 000 |
| Airport (515) | $2, 575, 000 |
| Intergovernmental Grants (218) | $200, 000 |
| Airport Improvement (308) | $125, 000 |
Holland admitted this has happened before.
“The main thing to do [when that happens] is get the department that is involved to recognize it quickly so that we don’t repeat the same mistake,” she said.
Nevertheless, the complexities of each department make it difficult to pinpoint a single point of failure. Because departments manage various requirements and reporting mechanisms, many factors can cause a reimbursement to stall.
“It’s not one simple thing and saying ‘Oh, don’t do that again,’” she said. “They have a lot of different requirements and a lot of different reporting mechanisms. So it could be any number of things that go wrong when we don’t get the reimbursement.”
Councilor Sarah Piano, Dist. 3, asked Holland if grants are often reimbursed after the fiscal year ends.
Holland confirmed that this is often what happens, and explained that her department has to come up with a precise schedule to keep track of all the different grants and dates.
They list how much each grant should be, how much it actually was, how much the city actually received, and how much was spent.
Mayor Marc DePauli noted that the two biggest outstanding grant reimbursements are the senior center and the airport, with the senior center sitting at $3.5 million and the airport project at $2.575 million. Those two grants make up the majority of the $6.4 million the city is currently missing in grant funding.
In an interview with the Sun, DePauli said he found the outstanding grant reimbursements concerning.
“I am concerned that these grant reimbursements are affecting our bottom line and our cash flow,” he said. “We have to go into our general fund to pay the contractor or whoever’s doing the work and then we have to wait for our reimbursement from the state or whoever the funding is from.”
DePauli noted that any federal reimbursements the city is owed usually come in fast, while state reimbursements take a bit longer.
Holland said she couldn’t provide a timeline for when the city would see the reimbursements come in.
Ultimately, despite these concerns over timelines, the council approved the budget adjustments.
Now that the third quarter is wrapped up, the city will spend the rest of May finalizing the Fiscal Year 2027 budget.
The city’s fiscal year ends on June 30.
