Boards and commissions hear budget update
The city of Loveland is facing “hard conversations” about the future of its programs and services in 2024 and beyond, thanks to the anticipated loss of sales tax revenue on food. On Wednesday, acting Deputy City Manager Mark Jackson delivered a sobering summary of the city’s situation at a super issues meeting of its boards and commissions.
“Without any real sustainable, additional revenue sources in the wings, we’re faced with the reality that we’re probably not going to be able to provide the same level of services that we have done historically for this community,” Jackson said.
The informational meeting attracted a crowd of around 50 to the Loveland City Council chambers on Wednesday, most of them members of one of the city’s 32 advisory boards or commissions. Other presenters included Chief Financial Officer Brian Waldes, Deputy CFO Molly Elder and Director of Communication and Engagement Nicole Yost.
Loveland’s 3% sales tax on food for home consumption was eliminated in January, following voter approval of a citizeninitiated ballot question on the issue in November. Based on sales tax returns from January and February, the city stands to lose around $1 million in general fund revenue each month or $12 to $13 million for the year, according to projections from Waldes’ office.
That means the city will now have to adjust to a “new normal,” as Jackson put it.
“Some of the things that you’re going to start seeing in terms of slowdown are going to be very popular with the community and that’s unfortunate,” Jackson said. “But again, we simply cannot afford to be a full service city at this point.”
That new normal will include deep cuts across all city departments on a permanent basis Jackson continued. In recent weeks, all division heads have been tasked with “itemizing and accounting for” every expense in their departments and then making a priority list, starting with 2024 projects and services.
The results of that exercise will be compiled into a “bridge budget” for the rest of the year that will be presented to the City Council on April 30.
The 2025 budget, which will also include deep reductions, will be made public in late summer or early fall.
“This is so far beyond a belt-tightening exercise,” Jackson said. “…What we’re going to be talking about is really redefining what are certain city services and the service levels that you find.”
Following Jackson, Waldes gave attendees a primer on municipal budgeting and how the city of Loveland structures its finances.
He started with an explanation of the city’s general fund, which is funded primarily through property and sales tax. It is used to pay for what the CFO characterized as “traditional” government services, such as public safety and street maintenance. But, over the years, he added, Loveland has also been able to use the general fund for amenities including cultural services, the library and civic events.
“Those programs very much inform the fabric of our community, the things that people love about Loveland,” he said.
The city also maintains enterprise funds, such as golf and utilities, that are self-funded and do not rely on general fund revenues, Waldes said. There are also special funds, and some city divisions receive a combination of general fund revenue and income from other dedicated sources.
But Wednesday’s discussion was focused on the general fund and its impending loss of revenue. Waldes emphasized that the enterprise and other city funds will not be directly impacted by the impending cuts, but also cannot transfer funding to the city to minimize general fund losses.
“If we’re having a problem in the general fund, we can’t raise power rates,” Waldes explained. “Residents shouldn’t have to pay higher electric bills because we’re having a problem with tax revenue.”
Waldes also provided a detailed comparison of the tax burden for residents in Loveland compared to other neighboring communities like Fort Collins, Longmont and Greeley.
According to the CFO, Loveland’s 3% sales tax is tied with Wellington for the lowest in Northern Colorado, and the elimination of tax on food makes the effective rate even lower. Combined with the third lowest property tax rate (9.564 mills) in the region, Loveland residents pay less taxes for its municipal services than just about anywhere else in Colorado.
“I’ve been here for a little over two years, and I’ve been so impressed by the job everybody does here,” Waldes said. “…People are top notch and they have been doing a phenomenal job for the city for a bargain price for a very long time.”
The presentation from Waldes got a warm reception from members of the audience, who praised the detail and clear explanations. Many also encouraged city leaders to look for other sources of revenue, including another potential ballot initiative aimed at reversing the elimination of taxes on food.
For more information about the city’s 2024 budget and the efforts to revise it, the Office of Communication and Engagement has established a “Budget Watch” web site at letstalkloveland.org/budget.