By Molly Ann Howell
Managing Editor
As the City of Gallup’s June 30 fiscal year-end approaches, Chief Financial Officer Patty Holland presented the Fiscal Year 2027 budget to the city council for its approval.
Because New Mexico’s Department of Finance requires municipal leadership to review a yearly budget twice before granting final approval, Holland introduced a preliminary budget to the council during its May 26 regular meeting.
The proposed FY27 budget includes a 5% wage increase for all city employees starting July 1. Additionally, Holland explained that the city has increased the sick leave payout for retiring employees. Retirees are now eligible for a 50% payout on their accumulated sick leave, capped at 1,000 hours.
Staffing levels will also shift in the new fiscal year. The city projects a payroll of 408 authorized employees this year—consisting of 73 part-time and 335 full-time workers. Furthermore, the city has created six new positions for FY27, bringing the total headcount to 408 employees.
ANALYZING THE FUNDS
Managing the city’s finances is a massive undertaking, as over 80 active funds and more than 5,000 line items compose the municipal budget. To keep the presentation manageable, Holland highlighted only a few key funds during the May 12 meeting.
For FY27, the general fund projects a revenue of over $44.8 million. However, with payroll and operational expenditures exceeding $49 million and capital expenditures topping $965,000, the city appears set to overspend. Capital expenditures represent the money an entity spends to acquire, upgrade, or maintain long-term physical assets like property, equipment, or software. Unlike daily operating expenses, these investments provide economic benefits lasting beyond a single fiscal year and drive municipal growth.
Despite the lopsided numbers, Holland clarified that the city is not actually going over budget.
In an interview with the Sun, she explained that the city utilizes cash on hand to bridge any budget deficits. While the city’s cash balance fluctuates daily, Holland annualizes and protects the current and upcoming fiscal years when finalizing the budget to ensure the city maintains at least a 20% cash reserve.
“I make sure that what we put in the budget is affordable and doable for the upcoming year,” she said.
Holland noted that the city operates with 180 days of cash on hand.
“That’s so when there are dire emergencies or there’s a problem with revenue flows or anything, we have the proper cash on hand to get through that period of time in order to not interrupt operations in any way,” she said.
During the May 12 city council meeting, Holland said the proposed budget leaves the city with a net of $5.2 million.
After addressing the general fund, Holland shifted focus to other departmental budgets:
The Solid Waste Department expects roughly $5.1 million in revenue against $4.6 million in operational costs and nearly $500,000 in capital expenditures, resulting in a net cash gain of over $30,000.
The Water Department anticipates revenue exceeding $7.5 million. Operational expenditures will consume nearly $5.3 million, while capital projects require just over $3 million. Budget documents show that the department will use cash on hand to finish FY27 with a net balance of over $765,000.
The Electric Department holds the largest enterprise fund in the city. It projects slightly over $29 million in revenue, nearly $25 million in operational costs, and almost $13 million in capital expenditures. According to budget documents, the department will conclude FY27 with a net of nearly $8.4 million in cash on hand.
The Wastewater Department projects revenue over $7.5 million against nearly $5.3 million in operational expenses. Capital expenditures total $308,000. Budget documents indicate the department will finish the year with a net of over $1.9 million in cash on hand.
Regarding the Wastewater Department, Holland reminded the council that large grant and loan awards will fund their major upcoming projects, meaning the city doesn’t need to pull that money from operational cash right now.
ADDRESSING THE PUBLIC’S CONCERNS
Following the departmental breakdown, the newest council member, District 2 representative Sierra Yazzie Asamoa-Tutu, urged Holland to present a “more narrative” summary of the budget next year. Yazzie argued that a narrative format would make the budget accessible to the general public, saving citizens from sifting through hundreds of confusing spreadsheets.
Yazzie also suggested allowing more time for public review and input before the city submits the annual budget to the state’s DFA.
Specifically, she highlighted public anxiety regarding the Gallup Police Department’s potential contract with Flock Safety—a company that operates a nationwide public-private network of AI-powered Automated License Plate Reader cameras.
In a previous budget meeting, Gallup Police Chief Erin Toadlena-Pablo said that the cameras would improve officer safety and time management. However, the potential surveillance network has sparked public outcry, drawing heavy criticism from residents during the public comment periods of several recent council meetings.
“I think [Flock] is definitely a concern for this council and something that we care about and have heard the public on,” Yazzie said. “I know that some people had expressed concern that [Flock, or a system similar to it] was still included in this budget, and I just wanted to point out that we are aware of the concerns on that line item, and moving forward with this budget doesn’t mean anything about the final contract that we’ll end up with for those services.”
Responding to Yazzie’s call for greater transparency, Councilor Sarah Piano, Dist. 3, warned that opening up the entire process could prove chaotic, considering the city manages a $40 million budget across more than 80 departments.
“If you want to come to me or Patty and you really want to know, you want to spend 12 hours going over the budget, you’re more than welcome to do that,” Piano said, addressing the public.
Piano further explained that before the city can launch a capital project such as the Flock program, the contract must come before the council for a formal vote. While Toadlena-Pablo requested the Flock system, the city may choose a different vendor at a later date.
“I know it feels like ‘Well, it’s in the budget, it’s written in stone,’” Piano said. “But it’s not really like that. The budget gives us the wiggle room to work on it.”
Holland agreed, reminding the council that approving the initial budget does not lock in specific project vendors.
APPROVING THE INITIAL BUDGET
Holland returned to the council during its June 9 meeting to secure approval for the initial budget.
She informed the council that the numbers hadn’t changed since her May 12 presentation. While several department heads have already requested budget revisions, Holland noted that the city cannot alter the FY27 budget until July 1. After that date, department heads can bring budget adjustments to the council for approval throughout the year.
Before the council voted, Holland issued a warning: in two years, the federal government will also begin scrutinizing local municipal budgets under the federal Financial Data Transparency Act.
The FDTA will eventually require over 80,000 state and local governments, as well as non-profit issuers, to submit continuous disclosures and bond offering documents to the federal government in a uniform, structured format. Holland warned that complying with the new law will force Gallup to hire more staff and purchase new software.
Furthermore, the federal government will require the city’s amortization schedule—the timeline that breaks down a loan into a series of fixed, equal payments.
Holland added that the federal rules will complicate Lodger’s Tax reporting. Previously, the city only had to report its total promotional and operational spending to the state. Under the federal mandate, the city must explicitly track each funded project, listing the title, date, and exact expenditures for every single event.
Despite the looming bureaucratic hurdles, the council unanimously approved the initial FY27 budget, which takes effect when the new fiscal year begins July 1.
