Generally, it's not a bad idea to go into every piece of literature, especially those written in first-person point-of-view, with the belief that the narrator is unreliable. Since Sherman Alexie's "This is What it Means to Say Phoenix, Arizona" is written in third-person, the narrator might seem more reliable. However, it's still okay to think about this narrator as having his own agenda. (Is he promoting a cause or idea? Or does he seem to be rooting for a character?) In this story, I think it's safe to assume that the answer is yes.
Throughout the story, there's a sense that the narrator wants the reader to feel the pain of Victor and all native people. This is clear from the second paragraph of the story in which the narrator points out the injustice that Indians on a reservation face: "Victor didn't have any money. Who does have money on a reservation, except the cigarette and fireworks salespeople?" This sense of injustice and pain runs throughout the story, from the Tribal Council's refusal to pay for Victor's trip to Phoenix to deal with his dead father's arrangements, to the mundanity of reservation life.
In addition, the narrator promotes the idea that Thomas Builds-the-Fire has some type of mystical Native American power. When introducing Thomas, the narrator discusses his history with Victor's father, and states plainly that "Thomas had known that Victor's father was going to leave, knew it before anyone." This seed of certainty in Thomas's supernatural abilities characterize the man as someone special.
While the narrator in "This is What it Means to Say Phoenix, Arizona" seems to be telling a straight-forward story, it's clear the story reflects the beliefs and values of the culture in which it takes place. This doesn't mean the narrator is unreliable—just that the story does come, like most stories, from a particular perspective.