City Budget Watch

Lovelanders could have the chance to decide how the City of Loveland funds its current service levels this November. On Aug. 6, Loveland City Council voted to allow the City to ask voters to continue keeping TABOR revenue to fund streets, parks and police. On Aug. 13, council voted in favor of asking voters for a 1% sales tax increase on non-food items to preserve current City service levels. If approved on Aug. 20 for second reading, both funding items would be placed on the November 2024 ballot.

This decision comes after months of discussion surrounding the City of Loveland’s General Fund budget.

Since 2016, the increase in costs to maintain infrastructure and provide services to the community have outpaced available revenue. In 2024, the City also lost an ongoing multi-million-dollar revenue stream to fund General Fund departments, including public safety (police and fire), transportation, community spaces (parks, library, museum, Rialto Theater, the Chilson Recreation and Senior Center, and Winona Pool), infrastructure projects, general government services, and support services for nonprofits, small businesses, and residents in need.

Read and download a summary of these two funding initiatives pros and cons of each by clicking here or the image below.

On Tuesday, Aug. 6, Loveland’s City Council voted to bring a TABOR override decision to voters on the November ballot and the second reading of the ordinance goes before Council on Tuesday, Aug. 20. The existing TABOR override expires at the end of 2024. If City Council approves the ballot language at their Aug. 20 meeting, voters will see a local TABOR question on the November 5 ballot.

With TABOR, also known as the Taxpayer Bill of Rights, if the total revenue collected by the state or local government exceeds the TABOR limit in any given year (both overall revenue and property tax revenue), then the excess amount must be refunded to taxpayers the following fiscal year. Voters can choose to allow their local government to keep excess TABOR funds, which is known as a local TABOR override.

Until last year, Loveland voters previously authorized four TABOR overrides, and between 2002 and 2023, $51 million has been invested back into City of Loveland parks and recreation, street maintenance and rehabilitation program, road construction and stormwater maintenance, and public safety.

More specifically, over the last two decades, of that $51 million, $37 million in local TABOR funds have been used by Loveland’s Public Works Department and were invested into the Loveland Street Rehabilitation and Maintenance program, road construction and flood mitigation. TABOR funds have also been used to invest in Loveland’s local park system with $7 million used to improve amenities such as Fairground Park and Viestenz-Smith Mountain Park. Another $7 million in local TABOR funds have been used to support the purchase of public safety equipment, training facilities, and technology.

Here are a few helpful details about TABOR in Loveland:

• For a local government to keep and invest excess TABOR revenue back into the community, local voters must choose to override TABOR
• The state is responsible for refunding its TABOR excess, just like the local government is responsible for refunding its excess
• A local TABOR override does not impact the state’s TABOR responsibility
• In 2025, the estimated local TABOR refund per Loveland taxpayer is approximately $15.71 per taxpayer
• The amount of the refund can fluctuate from year-to-year

Voter-approved local TABOR overrides are observed by the Town of Wellington, City of Fort Collins, Town of Timnath, Town of Windsor, City of Greeley, Town of Johnstown, Town of Berthoud, and City of Longmont. The City of Loveland is the only Northern Colorado community that does not have a current voter-approved TABOR override.

With the lowest sales tax rate and overall lowest tax load in Northern Colorado, and as the City of Loveland works to balance the 2025 budget, our annual Budget Workshop will be an information-only opportunity for City Council to further engage with staff in more detail about balancing next year’s budget. During the meeting, staff will discuss options including the current services budget and a reduced services budget.

The meeting will take place in person at the Loveland Police & Courts building, 810 E. 10th St., Thursday, Aug.15, 9 a.m.

This important meeting covers the entire City budget, and it’s part of the typical City of Loveland annual budgeting process. By law, the City of Loveland must operate under a balanced budget.

The City of Loveland General Fund has already experienced cuts in 2024 due to the loss of an ongoing multi-million-dollar revenue stream through sales tax. Although the meeting is not solely focused on the General Fund, the City of Loveland’s budget shortfall will be discussed.

Find the agenda at go.lovgov.org/CityCouncilStudyAgenda and check out other upcoming public meetings at go.lovgov.org/PublicMeetingSchedule.

As the City of Loveland prepares for an ongoing multi-million-dollar revenue shortfall to its General Fund, City staff have been working to educate the public about the use of sales tax, property tax and the Taxpayer Bill of Rights (TABOR) to fund city-provided services. In continuation of this effort, the City of Loveland is hosting a “Budget Funds Explained” educational event on July 18, from 5:30 to 6:30 p.m. Attendees have the option to join the meeting in-person or online.

The in-person event will be held in the Council Chambers at the Civic Center Municipal Building, 500 E. 3rd St., and online attendees can join by registering for the live Zoom meeting at https://go.lovgov.org/BudgetFundsExplained. Registrants for the online event will receive a confirmation email with information about joining the Zoom webinar. The event precedes the free July 18 Summer Concert at the Foote Lagoon, which features the retro rock n’ roll and swing band Last Call Romance at 7 p.m.

To date, the City’s Finance team has met with numerous community organizations and hosted informational booths at various City of Loveland events such as the Farmers Market. The goal of the July 18 event is to engage members of the public who haven’t been reached through other methods and to allow those who want to know more about the City budget a chance to learn and ask questions.

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 on Let's Talk Loveland.

Watch Now

Watch the Budget Funds Explained event on YouTube, or register for the Zoom Webinar above, to ask questions during the event.

Starting next year, several City-provided services and programs will be permanently reduced or discontinued as the City of Loveland works to cut millions from its budget in part from the loss of a key revenue stream from grocery sales tax. Impacts include everything from streets, traffic management, facility and park maintenance, police training, reduced or eliminated services and operating hours of the museum, Rialto Theater, Library, parks and recreation, and funds to support community groups, small businesses and nonprofits.

Without another significant revenue source before the beginning of 2025, this major budget deficit that began in 2024 is expected to continue indefinitely – affecting most departments funded by the General Fund.

How did our city get here?

Since as far back as 2016, the cost to provide City services has exceeded the amount of revenue we receive to pay for those services. Until 2023, grant money and income from large development projects helped us through. A citizen-led petition and voter-approved ballot measure to remove sales tax on food for home consumption during the November 2023 election put additional pressure on City’s financial situation. The voters have spoken; yet the unintended consequences mean that important decisions need to be made – and quickly. Based on calculations and real-time information from the Finance department, this will remove millions from City revenue streams indefinitely.

Learn more about the City’s different funds and how General Fund dollars from taxes are used.

What might budget cuts look like?

Using a strategic method for prioritizing programs and services, along with input from City Council and the public, City leaders returned to City Council earlier this week for their third discussion on the issue, presenting more-specific potential impacts.

Several changes have been proposed since the June 11 City Council meeting. Those are:

• The Library and Cultural Services departments would face smaller budget cuts, reduced from 50% to 33%.
• The Loveland Fire Rescue Authority (LFRA) will also see smaller cuts than previously recommended.

To make this adjustment, another $500,000 will be taken from the Parks and Recreation department, and more will be cut from the Public Works department.

In total, the latest draft for 2025 includes $12.2 million in expense cuts, anticipating $13 million in lost revenue. The anticipated cuts are:

• Public Works: $3.2 million
• Parks and Recreation: $2.95 million
• Library: $1.3 million
• Police: $1 million
• Community Partnership: $985,000
• Contributions to LFRA: $750,000
• Cultural Services: $605,794
• Economic Development: $287,000
• Finance: $250,111
• City Manager’s Office: $236,000
• City Clerk’s Office: $136,000
• Information Technology: $109,446
• Human Resources: $96,000
• Development Services: $74,092
• City Manager’s Office (City Council): $40,000
• City Attorney’s Office: $30,400

Reducing cuts to one area means deeper cuts to another, making this a difficult conversation to have. We are in a zero-sum situation.

Check out the list of City services currently expected to be reduced.

Is the only option to reduce services, or how can we increase revenues?

It is vital to have a balanced budget going into 2025. Based on community conversations, many City Councilors expressed a willingness during the July 9 study session meeting to consider revenue increases that may include sales tax increases or other specific tax items. Proposed ballot language would need to be approved by City Council before any tax increase item is added to the ballot for voters to decide. City staff is encouraged to consider fee increases where appropriate to offset associated program expenses.

Staff will be back in front of council on July 30 to follow up on a potential sales tax ballot discussion.

Loveland currently has the lowest sales tax rate in the region, and the current 3% sales tax rate has not changed in the last 40 years. See how Loveland taxes (and City of Loveland revenue) compares to our neighboring cities.

What happens next?

We’re a few months away from knowing exactly what cuts will look like. Several discussions are planned at future City Council meetings in August and September before a proposed balanced budget is presented to City Council for approval in October.

Details have and may continue to change, so be sure to join the conversation with us.

Calling all Lovelanders!

This situation is happening very quickly, and we want to hear from you!

• ASK your questions on Let’s Talk Loveland and help educate our entire community on this important topic.
• ATTEND the upcoming July 18 hybrid “Budget Funds Explained” event to learn and engage. Register now. Stay tuned for more information about an additional event on August 1.
• INVITE your neighbors to engage in this important discussion. We have educational resources and more right here on Let’s Talk Loveland.

This Budget Watch series is designed to keep the public informed about discussions and decisions around City service and program impacts as the City faces the permanent loss of millions of dollars in revenue to fund services.

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.