City of Loveland Faced With Multi-Million Budget Shortfall

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 the 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 of 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.