For the second year in a row, the Loveland City Council is facing uncertainty as it prepares to adopt an annual budget due to an upcoming sales tax vote. On Thursday, members met with city finance staff for a day-long study session to discuss that uncertainty and how the outcome of the November election could affect city operations next year.

“We don’t know exactly what our revenue model for our general fund will look like in 2025, given what happened Tuesday night,” said Brian Waldes, Loveland’s chief financial officer, referring to the council’s approval of a ballot question asking for a one-percentage-point increase in the city’s sales tax on non-food items. “So we have to be prepared to pivot. We have to be prepared to create a budget that is adaptable for both eventualities.”

This time last year, the city faced a reversal of the same problem after a citizens’ initiative was successful in demanding the abolition of the three percent sales tax on food for home consumption.

Waldes and his team estimated that the general fund balance would drop to over $10 million if voters approved the measure, and urged the City Council to prepare for permanent cuts in all city departments.

With this year’s sales tax question, the City Council is trying to stave off those cuts before they take effect in 2025. According to city finance officials’ projections, if voters approve a 4% sales tax increase on non-food items, it will generate an estimated $17 million in revenue next year, allowing the city to maintain its current level of services.

If voters don’t approve the budget, Loveland faces $11.5 million in cuts to nearly every city department. Waldes described the 2025 version of the budget as “reduced benefits,” which he will present to the City Council in October for formal approval.

The brunt of the burden will be on public works projects, which could see $3.2 million in cuts next year, much of it for capital projects and maintenance. That’s in addition to $3.5 million in capital cuts this year that helped the city close the gap in 2024 without reducing services.

The Loveland Public Library faces cuts of $1.4 million, about a third of its 2024 funding. That would mean the loss of nearly 10 full-time staff members, as well as cuts to research resources, user programs and its media holdings.

Also heavily impacted by the potential cuts is the Parks and Recreation Department (loss of $2.5 million), another department that has had to make cuts to capital projects this year. Also facing drastic cuts are the Loveland Police Department (loss of $1 million) and the City Manager’s Office, which will be forced to reduce the amounts available for community grants and assistance programs.

However, no cuts to employee salaries or benefits are planned, noted Deputy City Manager Mark Jackson, who was on hand to explain the prioritization of the cuts.

“There was a decision made very early on, which was supported by the council in the initial discussions, namely that we would not offset this reduced budget on the backs of the employees,” he said.

Although the cuts are not final, there is not much time left to tweak the 2025 budget, Waldes said. He and his team plan to have just two more study sessions with the council before the first formal reading on Oct. 1.

If the sales tax vote passes in November after the reduced version of the 2025 budget is officially released, Waldes said he and his team will go back to the council to submit amendments.

For more information on Loveland’s financial outlook, visit the Budget Watch page at letstalkloveland.org.

Originally published: August 15, 2024 at 5:17 pm