City Budget Watch

The Loveland City Council Study Session on Tuesday, February 25 includes the City Finance Department’s pre-audit fourth-quarter financial report. The meeting packet, published this evening, contains the full presentation that will be shared during the session.

Study sessions offer Council members an opportunity to explore specific issues in depth.

Revenue from sales tax aligned with revised budget projections but stronger-than-anticipated performance in other revenue sources helped offset the City’s overall loss. Pre-audit reports indicate that sales tax collections for 2024 were down 13.5%, resulting in a shortfall of $8,768,544.

A few highlights from the report include:

• Property tax collections were 3% over budget, bringing in $489,562 more than forecast. This includes a one-time, non-recurring state payment of $883,548.
• Regarding sales tax by industry, grocery stores and specialty foods were the hardest hit with a 64.5% loss in collections.
• Combined collections from property tax, sales tax, building materials use tax, and auto use tax were down 7.8%, totaling $6,776,759 less than the adopted 2024 budget.

Additional revenue gains and losses are outlined in the full meeting packet.

Council will also review early revenue trends for 2025. The January cash sales tax collections report shows collections currently down 14% from the adopted budget.

Tuesday’s presentation is a pre-audit report. As required by state law, the City undergoes an independent financial audit each year. A third-party firm conducts the review, typically completing it by mid-year.

Study sessions are on the second and fourth Tuesday of each month at 6 p.m. in the Loveland City Council Chambers, 500 E. 3rd Street. Meetings are conducted in a hybrid format and residents can participate in-person, virtually over Zoom, or by telephone with information about these options provided in the meeting agenda.

Residents can also watch live broadcasts of City Council meetings at lovgov.org/TV, on PulseTV channel 16, Comcast channels 16 and 880, or by searching "Loveland TV" on Apple TV or Roku.

For more information about the meeting, access the meeting packet at go.lovgov.org/CityCouncilStudyAgenda.

Looking Ahead: A Recap of the 2025 Budget

The annual City operating budget helps shape the future of our community and understanding how finances are allocated helps residents stay informed about essential services like roads, public safety, parks, and more. To check out the adopted 2025 budget, visit lovgov.org/budget.

Thank you, Loveland, for making your voices heard in this election. For over 70 years, the City of Loveland has worked to keep our community vibrant, healthy, and safe by reinvesting revenue from sales tax, property tax, and Taxpayer Bill of Rights (TABOR) excess into the essential services and amenities that make Loveland a great place to live. With your votes shaping our path forward, our commitment to you remains unchanged. It’s time to explore what comes next.

What we heard – election results

Tuesday’s election brought decisions that will shape our City’s future. Here’s a quick rundown of how the votes turned out:

1. Ballot Measure 2E: Voters turned down the proposal to raise Loveland’s sales tax from 3% to 4%, a rate that has remained unchanged since 1984.
2. Ballot Measures 2F and 2H: Voters approved medical and recreational marijuana sales and a subsequent excise tax on the sale of retail marijuana and retail marijuana products within City limits.
3. Ballot Measure 2G: Voters approved extending the TABOR override, allowing the City to retain and reinvest excess reserves for another 12 years. These funds support services like street maintenance, public safety, and parks.
4. Ballot Measures 2I and 2J: Voters turned down the proposal that would reduce the supermajority votes needed to appoint or remove the City Manager and City Attorney.

Find additional general election results on Larimer County’s website.

What this means for our community

Budget

“The results are clear and give us a better sense of our community’s priorities as we gear up for 2025. We’ll move forward with the reduced services budget we’ve been preparing for,” said Acting Loveland City Manager Rod Wensing. “While this won’t be easy, we’re committed to honoring the will of the voters and ensuring we stay aligned with what our community wants.”

The 2025 budget, adopted by the City Council late last month, will focus on maintaining essential services, prioritizing public safety, and staying compliant with legal and contractual obligations. Our goal is to continue effectively supporting our residents, even if it means adjusting the level at which we operate.

Marijuana sales

This marks an important new policy direction for Loveland, and it is estimated to take up to 12 months to complete the regulations and start issuing licenses. The City Manager’s Office will be back in front of City Council with an update in the near future.

While it brings potential revenue growth for our City, this won’t immediately address the current challenges within the General Fund. Establishing this program and understanding the operational costs will take time, and only then can we evaluate how surplus revenue might support the General Fund. Stay connected as we provide updates on this evolving area and its potential impact on our community.

Service-level reductions: What to expect

Some service reductions began in 2024 as departments prepared for changes related to staffing, contracts, and other needs. More formal adjustments will roll out after January 2, 2025, and continue throughout the year.

We have thoughtfully planned these adjustments, focusing on maintaining public safety and emergency preparedness, meeting legal and regulatory obligations, and fulfilling contract requirements. We also assessed risks and considered impacts across the organization and over the long term. Other key factors included cost recovery and the seasonality or scalability of services.

Looking ahead: Fiscal stability and strength

As we enter 2025, many unknowns remain, and our executive leadership team will work closely with Loveland’s new City Manager to ensure these changes are managed smoothly and communicated clearly. You’ll know what’s happening and why. We’re committed to informing you about our financial progress and why maintaining fiscal stability is important.

Again, thank you for making your voices heard. We’re all in this together, and we’re committed to keeping Loveland a great place to live, work, and play.

The Loveland City Council adopted the 2025 Loveland Budget on Tuesday, Oct. 15 with a vote of 6-3.

The 2025 budget process was complicated by the reduction in sales tax revenue to the General Fund due to the loss of a major revenue source. The estimated loss is $10.5 million in 2024 and each year going forward. This reduction, along with an already strained General Fund, led to necessary expense reductions to align with reduced revenue.

To address this, City staff prepared two budget options for 2025: one with reduced services and one maintaining current services. The reduced services budget was approved, and outlines reduced General Fund capital and program expenses to match current revenue. If the City’s financial position should improve in November, the current services budget could be implemented with City Council approval. Those discussions would need to happen in public meetings after the 2025 revenue model becomes known.

Outside of the General Fund, the 2025 City budget is “business as usual.” Our Utility (Water, Power, Pulse Internet Service), Enterprise (Stormwater, Golf, Mosquito Services) and Special Revenue (Marketing, Conservation Trust) funds are not directly impacted by the sales tax change, as their revenues come from user fees and special purpose taxes. These funds still face the challenges of rising capital costs and supply chain issues, but do not require any unscheduled fee increases.

See the reduced services and current services budgets outlined during the August 15 Budget Retreat, the 2025 rates, charges and fees. Other information on the 2025 budget can be found in the October 15 City Council packet.

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.

--
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.

--
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