Gallup budget plan includes 5% pay raise for city workers

Gallup’s next budget put a 5% raise for city workers on the table while the city leaned on reserves to keep day-to-day services steady. The plan also added six positions, lifted retiree sick-leave payouts and left officials balancing payroll growth against a general fund that still runs tighter than its expenses.

Chief Financial Officer Patty Holland presented the Fiscal Year 2027 preliminary budget to the Gallup City Council after an earlier review, and the council adopted it by resolution R2026-16 on May 12. Public notice went out May 8, and the city then asked the Local Government Division of the New Mexico Department of Finance and Administration to approve the plan before the new fiscal year begins July 1 and runs through June 30, 2027.

The biggest immediate cost is labor. Holland said the city planned for 408 authorized positions next year, including 335 full-time workers and 73 part-time employees, with six new positions added overall. The 5% wage increase would begin July 1, and the city also raised the sick-leave payout for retiring employees to 50% of accumulated sick leave, capped at 1,000 hours. That is a clear bet that better pay and benefits will help Gallup keep staff in place as payroll pressure grows across local government.

The numbers show why officials are leaning so hard on reserves. The General Operating Fund recap lists $40,464,587 in revenues against $47,527,050 in expenditures, plus $1,785,472 in transfers. Even after those pieces are accounted for, the fund shows a $23,786,831.46 balance, with $3,960,587.50 in reserves and an adjusted balance of $19,826,243.96. Holland said the city keeps at least a 20% reserve and has about 180 days of cash on hand, a cushion meant to absorb emergencies or slow payments without shutting down basic operations.

That cushion matters because Gallup’s general fund covers operational expenses for nearly all city departments except utility divisions. When cash gets tight, the pressure does not stay on paper. In April, Holland told council that four funds had negative cash balances totaling $6.4 million, often because the city was waiting on grant reimbursements, and the city covered those gaps with temporary general-fund loans. For residents in Gallup and across McKinley County, the next year will show whether the city’s mix of raises, reserves and short-term borrowing protects services, or merely postpones harder choices.