Budget 2027: How Do We Pay for Our Capital Needs?
In 2024, it was identified that the Town needed to begin "living within our means". Budgetary forecasts projected a bleak and dire situation, where the Town would exhaust it's Capital Improvement Fund by 2028. At that time, the projections had already indicated we would not have enough money in this fund to pay for such things as street maintenance. And at the same time, a warning was provided about potential dominoes - where if the Town's current position did not change, if there were any decreases in revenues or any unexpected funding needs in the near future — it would have an impact on things as simple as maintaining our roads.
Now in August 2026, the Town's Finance team has indicated this is not just a possibility anymore - it is going to occur. In response, Staff has requested a 10% cut across all departments, and will be coming before Council to recommended an additional fee be added to our utility bills - a dedicated "Transportation Maintenance Fee" - in order to ensure we have adequate funding for street maintenance in the future. The Town is now in this position - and the question now becomes are we too late?
The August Study Session
Every year, before Staff even presents the proposed budget for the following year, they meet with Town Council to discuss the large projects and assumptions that are used for the proposed budget in October. This year, the discussions are going to be central to one central issue - "Given that transfer funds to the CIF (Capital Improvement Fund) are limited and dependent on available unassigned operating funds from the General Fund, we must prioritize sustaining the CIF fund."
A major reason for having this discussion is because based on the current maintenance and capital project needs, the CIF is anticipated to have less funds available in 2028 than would be required for even just our Street Maintenance needs alone - which are budgeted annually at $4.5 million.
The Warning Signs
This issue and eventuality was brought up in 2024, based on the comments, information, and forecasts provided by the Town's Finance team leading up to the proposed 2025 budget. As I had noted in a post at that time, "this lack of funding availability has the potential to create a domino effect" where "if the Town's current position does not change, and there are any decreases in revenues or any unexpected funding needs in the near future — it will have an impact on things as simple as maintaining our roads."
Some in the community said that my comments were simply "sensationalism" and "misinformation". Even the former Mayor and Mayor ProTem that I served with on Council at that time dismissed my claims as false. They claimed that these were only forecasts, and did not mean this is what would actually occur. They also said that the forecasts did not include certain things like the additional sales tax the Town would receive at King Soopers from the additional growth generated by the Baseline project in Broomfield.
Our former Town Manager at the time, when he heard that I said "bleak and potentially dire situation" or that I had said we were "deficit spending", he told me I shouldn't use that language because it carries a negative connotation. It took a meeting with our Finance team and myself for him to understand my reaction was valid, which he admitted how "we have to start living within our means". This led to the 2025 approved budget being scaled back significantly from what was originally proposed.
The Dominoes that Fell
Development activity within the Town has accounted for approximately 10-20% of General Fund revenues annually in years past. While this percentage had been higher historically, Sales Tax eventually surpassed development revenues in terms of share of the overall General Fund revenues when the Town began to collect Sales Taxes form online orders.
The dominoes began to fall in 2025 when a slowdown of development activity within the Town occurred mid-year in light of various economic factors, which then caused the current Council to make adjustments accordingly.
This trend continued in 2026 as permits for new residential construction have been lower than even initially estimated for budgeting assumption purposes.
Ultimately, it has resulted in use tax and building permits falling by over 40%, while year-over-year sales tax growth has slowed to just 2%. Our Finance team has even indicated that "year-to-date revenue trends indicate that the Town's revenues will continue to stagnate or even decline" moving forward.
Uncertainty Still to Come
In May of this year, Staff identified that our raw water available for development was significantly impacted by delays in the NISP and Chimney Hollow projects. Due to the uncertainty of when these projects might come online, and because the Town was nearing exhaustion of our already existing water shares, Staff recommended a water allocation policy. This policy affects projects town-wide - including development activity - where those that now wish to access the Town's already existing raw water shares will need to be prioritized among other competing projects, unless say a developer brings their own raw water for a development.
With this policy enacted, it effectively places a growth cap on the Town for the next 5-7 years, until these water projects come online. The percentage that was applied to residential development - 65% of 125 Acre Feet - equates to approximately 180 single family dwelling units. Not including the impacts that this will also have on other initiatives like Economic Development, these water allocations will stagnate residential growth in the Town for at least the next 6 years or so.
In light of this, budgetary considerations must also be made to develop alternative projections for revenues received from future development, which most likely will mean continued stagnation in development revenues (except for minor increases due to inflation and annual adjustments of fees).
Funding Our Capital Needs
In order for the Town to be able to fund our future maintenance and capital project needs, Staff has begun to identify alternative ways to increase funds necessary in order to "right-size" the budget. To do this, they moved forward on slowing spending in order to "provide a more stable forecast moving forward."
The first step was to request each department reduce expenses by 5%, and then an additional 5%, to bring the total up to a 10% expenditure cut across the board for all departments.
Another idea that has been proposed is a dedicated Transportation Maintenance Fee, "a small fee charged per resident on monthly utility bills to support ongoing street paving and associated transportation operations."
With this proposed fee already built into the 2027 budget assumptions, Staff is essentially indicating that this fee will be required to meet our capital and maintenance needs - and to stabilize the CIF for the coming years.
Conclusion
*Just a side note to all of the items that I discuss: I am a solutions driven problem solver by nature. I wonder how things work, why they work the way they do, and how to make them better. This means seeking different, outside-the-box methods to figure out solutions to various issues. Accordingly, I am always open to learning new ideas, different ways of doing things, as well as constantly learning from others' experiences to make better decisions. When I see an issue, I view it in a holistic fashion, and then dive into specific areas to remove deficiencies and create efficiencies. If you, who are reading this, have some thoughts or ideas about any of the subjects I discuss, I would be more than happy to speak with you to hear your opinions. Please reach out to me here through my website. Listening, hearing, and understanding different perspectives is the only way that we can all grow and create positive change - by learning from others, and delivering ideas that push the needle to become Forward Thinking.
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