Loveland council to hear budget-cut proposals

LOVELAND — A presentation by Loveland’s city staff to a special City Council meeting on Tuesday will outline proposals for sharp across-the-board budget cuts to make up for a projected $13.2 million annual shortfall in sales-tax collections as a result of the voter-passed repeal of the tax on food for home consumption.

“The city of Loveland will be unable to maintain its existing service levels as a result of this reduced funding,” City Council members will be told. “The revenue shortfall in 2024 can be covered using a mix of capital project cancellations, partial service-level reductions and one-time operational savings from 2023,” but “these measures will only get us through the 2024 shortfall and cannot be repeated.”

Voters approved the discontinuation of the food tax with citizen-initiated Ballot Issue 300 in November. Budget writers have been working since that time to project what the loss will be, and how that will impact city spending.

SPONSORED CONTENT

Business Cares: May 2024

As Mental Health Awareness Month unfolds in Colorado, it serves as a reminder of the collective responsibility to prioritize mental well-being.

To balance the year’s budget, the staff presentation, outlined in Tuesday’s meeting packet, will recommend “bridge” budget reductions to account for the revenue loss, including canceling this year’s scheduled capital improvement projects and one-time expenditures and using savings from vacancies that occurred last year.

The staff’s 2024 recommendations call for $3.615 million in cuts — the presentation calls them “de-appropriations” — in public-works spending and $1.872 million in parks-and-recreation spending. Coupled with $8,404,804 in one-time savings from 2023, the staff is urging $13,891,804 in cuts for this year. 

The recommended 2024 reductions would need to be approved by the City Council during a separate public meeting and would take effect this year.

After a March 19 presentation of the city’s monthly financial report to the council, acting City Manager Rod Wensing asked the members to consider holding the special meeting on Tuesday to provide guidance regarding the ongoing multi-million-dollar general-fund shortfall.

“We know we’re facing an ongoing revenue shortfall, and it’s my role to bring recommendations to the City Council on how we can balance the 2024 budget and plan for 2025,” Wensing said in a prepared statement issued by the city. “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 the City Council.”

Review of the 2025 budget would normally begin in June rather than April, then go to the City Council for review in October. However, Wensing will ask the council to provide guidance on how the staff should prioritize and reformulate city services and programs for 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,” Wensing said. “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 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.

The recommendations do not include use of the city’s emergency city reserve funds, the staff presentation says, because “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.”

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.The meeting will begin at 7 p.m. in the Municipal Building Council Chambers, 500 E. Third St., broadcast on Comcast Channel 16/880 and Pulse TV channel 16, and streamed through the city’s website at lovgov.org/tv.