City Budget Watch

As the City of Loveland prepares for an ongoing multi-million-dollar revenue shortfall to its General Fund, during an April 30 study session, Loveland City Council offered guidance to ensure a balanced budget in 2024 and prepare for more impactful changes in 2025 and beyond.

The council understood the methodology and supported the approach of using capital project cancellations and 2023 salary savings to offset the revenue loss in 2024.

For 2025 and beyond, guidance was to focus on essential City functions like public safety, infrastructure, and core services while maintaining emergency reserves. Staff are also encouraged to reevaluate whether impacts can be minimized on public-facing services such as parks, cultural services, and the library. The council also discussed exploring the possibility of pursuing a potential tax increase to preserve City services at current levels.

What is next?
According to Acting City Manager Rod Wensing, this is the first high-level touchpoint in a multi-step process to address the City’s budget. Staff will be back in front of the council next month to provide a progress update, including more detail about what proposed reductions look like and potential ballot language for consideration. Budget de-appropriations, which allow the City to reallocate money to cover 2024 expenses, are planned for a July council meeting followed by a Budget Retreat in August.

Stay informed
Understand the City of Loveland’s budget, where your tax dollars are invested in the community, and stay tuned to news and information through the City of Loveland’s Budget Watch page at letstalkloveland.org/budget.

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CONTACTS:

• Kim Overholt, Communication & Engagement Manager, 970-962-3268, Kimberly.Overholt@cityofloveland.org
• Nicole Yost, Communication & Engagement Director, 970-962-2302, Nicole.Yost@cityofloveland.org

Following a presentation of the City of Loveland’s monthly financial report to Council on March 19, Acting City Manager Rod Wensing asked them to consider holding a Special Meeting on Tuesday, April 30, with the intent to seek strategic guidance regarding an ongoing multi-million-dollar shortfall to the City’s general fund.

“We know we’re facing an ongoing revenue shortfall and it’s my role to bring recommendations to City Council on how we can balance the 2024 budget and plan for 2025,” said Acting City Manager Rod Wensing. “Final City Council decisions have not yet been made, but based on general fund revenue shortfalls, we know that we can no longer operate as we have. This is a new normal that requires us to rethink the service levels that the City of Loveland can realistically sustain. We look forward to a productive discussion with City Council.”

City staff will present the following recommendations for Council feedback and guidance Tuesday night.

2024 budget adjustments

To balance the current year’s budget, staff recommend “bridge” budget reductions to account for the revenue loss in 2024. The recommendation involves canceling scheduled 2024 capital improvement projects and one-time expenditures and using savings from 2023 position vacancies. Recommended 2024 reductions would need to be approved by City Council during a separate public meeting and would take effect later this year.

2025 budget preparation

Review of the 2025 budget typically begins in June rather than April, and staff have been evaluating the long-term impact of decreased cash collections on sales tax revenues. The 2025 budget goes to City Council for review in October; however, Wensing is asking Council to provide strategic guidance on staff’s methodology used to prioritize and reformulate City services and programs relying upon the General Fund in 2025 and beyond to ensure a balanced budget.

Over the last few months, the City’s Executive Leadership Team has invested in a prioritization exercise to inform the methodology for this important and difficult budget recommendation we are proposing on Tuesday,” said Wensing. “An immense amount of work and thought has gone into it because of the challenging nature of these decisions for both the City and our community.”

The proposed methodology prioritizes critical City services while reducing other City projects, programs, and services for a sustainable and balanced 2025 budget.

Proposed reductions could impact all General Fund departments but prioritize public safety, infrastructure asset management, community mobility, and critical core government business services. As a result, General Fund City services and programs that are not within those prioritized areas would be significantly reduced, delayed and in some instances, eliminated.

Staff does not recommend use of emergency City reserve funds as there are limited opportunities to replenish any funds used going forward, and reserves must be retained for unforeseen community emergencies such as floods, wildland fires, etc.

“We are focusing on what we can do with our available General Fund resources,” said Acting Deputy City Manager Mark Jackson. “There is no way to preserve all our programs and services. This process and the recommendation have been difficult for everyone involved, but we must operate within our means.”

The City budget is a policy-level document that establishes spending priorities and guides programs and service levels. By law, the City must operate within a balanced budget and enterprise or special revenue funds cannot be used to cover General Fund budget shortages.

Details on the City Manager’s budget recommendations are now available as part of the April 30 City Council meeting packet.

Participate in Tuesday’s meeting

Tuesday’s City Council Special Meeting agenda and packet can be found on at cilovelandco.civicweb.net. The meeting begins at 7 p.m. in the Municipal Building Council Chambers, 500 E. Third St.

The meeting will be broadcast on Comcast Channel 16/880, Pulse TV channel 16 and streamed through the City’s website at lovgov.org/tv.

For more information about the City of Loveland budget, visit LetsTalkLoveland.org/Budget.

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CONTACTS:

• Kim Overholt, Communication & Engagement Manager, 970-962-3268, kimberly.overholt@cityofloveland.org
• Nicole Yost Communication & Engagement Director, 970-962-2302, nicole.yost@cityofloveland.org

During the Tuesday, March 19, City Council meeting, the City Manager’s Office and Finance Department presented Loveland’s latest Monthly Financial Report and discussed the organization’s plans to address a forecasted multi-million dollar shortfall to the City’s General Fund. City Council also approved a motion to hold a special meeting on Tuesday, April 30, to discuss impacts.

The February Monthly Revenue Report confirmed that sales tax cash collections were 13.4% less in January 2024 than in January 2023.

With the repeal of the sales tax on food for home consumption taking effect at the start of the year, City leadership is faced with the difficult task of determining how to balance the 2024 operating budget amid substantial revenue losses, while also preparing for the 2025 operational budget.

City leaders are currently taking a comprehensive look at programs, services, and functions that the City of Loveland provides in priority order, examining what is mission-critical, and finding reductions. It’s a task that Acting City Manager Rod Wensing is hopeful the team will complete over the next six weeks.

“With this annual revenue loss to the General Fund, and without any impactful revenue sources expected soon to offset this loss, we must embrace that the City of Loveland can no longer afford to operate as we have in the past,” said Wensing.

Monthly sales tax returns and payments are due from vendors on the 20^th day of the following month. Cash collection for February will be confirmed in the March Monthly Revenue Report to be presented to City Council in April.

Projections regarding 2024 impacts will continue to fluctuate—particularly as new financial information is confirmed with each month’s sales tax collection. But in general, sales tax collections are fairly consistent from month-to-month and the City of Loveland has begun to see the severe impact of the shortfall.

The importance of sales tax

Sales tax collections impact the City’s General Fund and, although the General Fund is only 16% of the City’s total budget, it serves an important role. It funds day-to-day operations and supports local government services such as police and fire protection, facility and road maintenance. It also provides funding for amenities such as the library, parks, recreation and cultural services.

The remainder of the City’s budget is comprised of dedicated funds such as enterprise and special use funds, which are earmarked for specific purposes and cannot legally be used for other city expenses.

The City of Loveland’s sales tax rate hasn’t increased since 1984, and the City—which serves a population over 77,000.

Regional sales tax and population comparison

The importance of property tax

In addition to sales tax, property tax serves as another important revenue source for the General Fund. The City of Loveland has one of the lowest city property mill levies in Northern Colorado. The City’s mill levy has been 9.564 since 1992.For property taxes collected in Loveland, the City’s share is just 12%.

Regional property tax mill levy and population comparison

Municipalities rely on tax revenues to fund essential services. A balanced and sustainable budget ensures that these services remain operational and accessible to residents without interruption.

“Our City of Loveland community loves our programs and services,” said Wensing. “Now we have to figure out what to fund and how to fund it.”

Learn more and keep up with developing budget news by visiting LetsTalkLoveland.org/Budget.