Key Points
- The San Tan Valley Town Council unanimously adopted a $14,725,000 interim budget on April 1, 2026, covering April 1 through June 30, 2026.
- The budget gives the town legal authority to spend its own state-shared revenues for the first time since incorporation.
- The budget is split into two funds: a $10,000,000 General Fund and a $4,725,000 Highway Users Revenue Fund restricted to road expenses.
- Most town employees will transition off ESI contracts and onto the town’s own payroll beginning May 8, with one staff member remaining under ESI for specific contractual provisions.
- The $6,568,350 contingency line requires council approval to access and is not a discretionary fund.
- Arizona Treasury public records show the town had received $15,821,038.48 in state-shared revenues as of April 10, 2026.
- Staff will present a draft Fiscal Year 2026–27 budget to the council in May. Adopting the interim budget sets no limit or baseline for that budget.
- The council will consider a parks needs analysis as a future agenda item, following public comments highlighting a shortage of athletic fields for youth sports leagues.
- The council will also consider calling a voter election in May to replace the state-imposed spending cap with a locally set limit beginning in Fiscal Year 2027.
SAN TAN VALLEY, AZ — The San Tan Valley Town Council voted unanimously on April 1, 2026, to adopt Ordinance No. 2026-02, formally approving a $14,725,000 interim budget for the remainder of Fiscal Year 2026. The action gives the newly incorporated town the legal authority to begin spending its own money for the first time. The interim budget covers April 1 through June 30, 2026.
Spending Unlocked
Before Tuesday’s vote, San Tan Valley had been collecting state-shared revenues but could not spend those funds without an adopted budget. As of a February 19 work session, finance consultant Bill Kauppi announced the town had approximately $11.5 to $12 million in the bank, none of which it could legally access without an adopted budget. To cover startup costs in the meantime, the town had borrowed $1.405 million from the neighboring Town of Queen Creek, accruing $1,200 in interest as of February 19. Mayor Daren Schnepf noted that passing the budget “will allow us to access and spend the state-shared revenue funds that we’ve currently been receiving.” Finance Director Gabe Garcia confirmed that assessment.
Additionally, Garcia said the budget, combined with a previously approved benefits plan and Arizona State Retirement System resolutions, enables the town to produce its own payroll beginning May 8, bringing most staff on as direct town employees. Until now, all town employees had worked under contracts with ESI, Educational Services LLC, a public sector workforce staffing provider. Garcia said one staff member will remain under that arrangement for specific contractual provisions, but otherwise the ESI contracts will end and those workers will become employees of San Tan Valley.
Staff are also working on the next full annual budget now. Garcia said the town plans to present a draft budget for Fiscal Year 2026–27 around the first part of May. He noted that adopting the interim budget sets no basis, authorization, or limit for next year’s budget. It only caps spending from April 1 to June 30, 2026.
The Budget Itself: Two Funds, Two Spending Caps
The $14,725,000 interim budget is divided into two funds. The General Fund totals $10,000,000. The Highway Users Revenue Fund (HURF) totals $4,725,000. Both figures represent maximum spending authority, not planned expenditures. The staff report noted there were no changes between the tentative budget and the final budget adopted April 1.
Garcia noted that “state law requires us to budget all monies received.” The $14,725,000 budget represents the town’s best estimate of revenues it expected to receive through June 30, 2026, and sets the maximum the town may spend. According to Arizona Treasury public records, the town had already received $15,821,038.48 in state-shared revenues as of April 10, 2026. That total includes $4,341,175.39 in HURF distributions, $8,187,612.98 in state sales tax, and $3,292,250.11 in vehicle license tax. Because the $14,725,000 cap applies to expenditures rather than cash receipts, revenue above that amount does not represent overspending — it carries over as fund balance into the next fiscal year.
The General Fund can be used for administration, legal services, community development, parks, or any other municipal purpose. HURF, by contrast, is restricted to road-related expenses such as pavement maintenance and street improvements. The $4,341,175.39 received in HURF distributions falls just under the $4,725,000 budgeted for that fund.
Garcia said any funds left unspent at June 30 carry over as a fund balance. That balance becomes the beginning balance for the following year’s budget and can be reappropriated.
The budget sets aside the following amounts to cover personnel compensation for the 15 authorized positions:
| Category | Amount |
|---|---|
| Salaries and hourly costs | $513,600 |
| Retirement costs | $61,500 |
| Healthcare costs | $54,000 |
| Other benefit costs | $44,000 |
| Total personnel compensation | $673,100 |
The $6,568,350 Contingency
Vice Mayor Tyler Hudgins asked Garcia to explain the $6,568,350 contingency line item for the benefit of the public. The full general fund breakdown, as adopted, is as follows:
| Department | Budgeted Amount |
|---|---|
| Council | $13,000 |
| Administration | $598,000 |
| Town Clerk | $354,750 |
| Legal | $640,000 |
| Finance | $327,900 |
| Human Resources | $184,800 |
| Information Technology | $185,700 |
| Community Development | $672,300 |
| Parks & Recreation | $221,100 |
| Police | $60,000 |
| Court | $25,000 |
| Public Works | $149,100 |
| Contingency | $6,568,350 |
| Total General Fund | $10,000,000 |
Garcia explained that when the original consultants drafted the budget, only one town employee existed. Consultants estimated what it would cost to get each department off the ground and placed the remaining funds into contingency. That reserve gives the town flexibility when actual costs exceed estimates.
He used the Tyler Technologies financial software implementation as an example. The town had a budgeted estimate, but until the contract was finalized, the actual cost was not certain. Contingency funds can cover the difference.
Hudgins followed up, asking whether draws from contingency would come back to the council. Garcia explained two separate rules. First, under the procurement policy established by Resolution 2026-03 in January, Town Manager Brent Billingsley has authority to approve purchases under $75,000 from budgeted line items, adding “anything over $75,000 would have to go to council.” Second, and separately, Garcia said “if it’s something that’s not budgeted that’s gonna come out of contingency, it requires council approval.” Garcia also cautioned: “You don’t wanna make it seem like it’s just a blank check.” Hudgins asked whether that meant the contingency could function “like a slush fund.” Garcia said no, explaining it requires “things that we have to have a process to implement.”
Reserve Funds and Large Infrastructure Costs
Garcia told the council that a future council meeting will address the question of fund balance reserve requirements. These would function as a formal rainy-day fund separate from the general contingency.
He pointed to road infrastructure as an example. Garcia estimated road construction in the area at more than $2 million per lane mile. A single major project, such as widening Hunt Highway from two lanes to as many as seven, could easily require carryover funds accumulated over several years. Garcia said the town will establish reserve requirements, but the fund balance will also be available for capital improvement projects and other large undertakings.
Spending Limits, Carryover, and the Case for a Permanent Base Adjustment
Councilmember Brian Tyler asked how the state-imposed expenditure limitation interacts with carryover funds. Garcia explained that the town can only spend up to its approved spending cap in a given year, regardless of how much revenue it receives: if the town receives $20 million before June 30, it can only spend up to $14 million. Unspent funds carry over and are not lost.
For Fiscal Year 2027, the town will operate under a state-imposed spending cap for the first time. Staff plan to bring a proposal to the council in May to call an election asking voters to approve a higher local spending limit, replacing the state-calculated cap with one set closer to home. Town Manager Billingsley clarified how that process works: “Council decides to call the election, but it goes to the voters.”
Garcia explained that the state expenditure limitation is based on a 1979–80 formula calculated by the Economic Estimates Commission when San Tan Valley did not exist as a municipality. Garcia said the commission used a population of 91,000 as the basis for that calculation, with the figure adjusted annually.
The mechanism would allow the town to set a higher spending ceiling, Garcia explained, citing Queen Creek, which he said carries an $800 million expenditure limitation. That does not mean Queen Creek spends $800 million. The town’s actual budget may be far lower. But the high ceiling gives the council authority to receive and spend large grants. Garcia noted that grants such as BUILD and TIGER are typically large. “They’re $7, $10 million, $20 million that you could get,” he said. Without sufficient spending authority, the town could not legally spend such awards even if it won them.
Garcia said the adjustment “doesn’t change the amount of money that we charge, the taxes, the fees, or anything like that. It just allows the council to set the amount of money you can spend.”
Public Notice and Comments
According to the public hearing notice, the tentative budget was published in a local newspaper for two consecutive weeks, posted at santanvalley.gov, and made available for public inspection at 31505 N. Schnepf Road. Garcia confirmed at the meeting that no written public comments had been received before the hearing.
Several residents addressed the council during the public hearing.
Jeanne Stockton, a San Tan Valley resident, asked whether the budget included money for lawsuits and liability insurance. Garcia confirmed it does.
Karen Mooney, also a San Tan Valley resident, asked about the Parks and Recreation line item of $221,100, noting the town owns no land. She also asked whether there would be transparency on how contingency funds are spent.
Josh Statler, vice president of the San Tan Valley Little League, tied his remarks to the Parks and Recreation line. He said the league currently uses Combs Middle School as its home field, but the fields are not in good shape. The league fields 35 teams, up from about 30 last spring, and a few teams have grown to 14 players due to the lack of available space. He said HOAs have pushed youth leagues off community fields, preferring them for dog parks or other uses, leaving coaches and board members unable to answer a basic question from players and parents: “Where do we practice?”
After closing the public comment period, Garcia responded to the parks questions. He said the Parks and Recreation budget line exists to begin foundational planning work, specifically a parks master plan that would identify which land to acquire, at what cost, and what amenities to develop. Town Manager Billingsley added that the county had been in discussions with developers about potential park properties. He said the budget allocation was included in case Pinal County Supervisor Goodman approached the town with an opportunity, asking the town to “go in on a financial feasibility study or something along those lines” with a willing partner.
Garcia also responded to Mooney’s transparency question. He said staff actions involving budget expenditures would identify the specific fund source, and that contingency draws would most likely involve bigger ticket items brought to council for approval.
Parks as a Future Agenda Item
Following budget adoption, the council moved to its agenda consideration segment. Councilmember Brian Tyler requested that the council consider placing a parks needs analysis or committee on a future agenda. He cited the range of sports teams and community events in the area and said a formal assessment of the community’s parks needs would be appropriate. Mayor Schnepf agreed, noting the topic would also connect to future budget discussions.
Vote and Ordinance
The council voted unanimously to adopt Ordinance No. 2026-02, the final step after the council set the tentative budget in early March.
The town now has authority to spend up to $14,725,000 through June 30, 2026, the end of Fiscal Year 2026.
Staff will present a draft Fiscal Year 2026–27 budget to the council around the first part of May. Under A.R.S. § 42-17110, that budget will be constructed as if no interim budget had been adopted.
