Longmont finance staff presented the city's proposed 2026 budget at the Sept. 2 study session, describing revenue pressures and several policy changes staff say would stabilize recurring finances and better match ongoing staffing to development activity.

Theresa Moy, Chief Financial Officer, and Sandra Cifuentes, Budget Manager, told council Longmont's proposed 2026 budget projects $476.3 million in revenue and $520.2 million in expenses, with an overall planned use of fund balance (mostly for capital) and $93.2 million proposed for capital improvement projects. Moy said the adopted 2025 budget was revised upward after reassessment results and carryover appropriations; staff have since brought additional appropriations for prior-year carryover projects and grants that increase the 2025 revised total.

Sales and use tax: staff reported that through June 2025 Longmont was up 1.9% in sales tax but down 21% in use tax, for a combined decline year-to-date. Moy said July numbers were expected shortly but that 2026 projections are effectively flat; staff told council they are projecting only modest sales-use growth in the near term.

Carryover appropriation and fund accounting: Mayor and finance staff emphasized the city's practice of carrying unspent appropriations year to year (most funds lapse at year-end by charter, requiring formal carryover). The carryover total drives much of the 2025-to-2026 revised budget increase; staff said most carryover dollars are capital project funds, FEMA and other multi-year grant awards, and bond proceeds reserved for unfinished projects.

Incremental development revenue (IDR) threshold: staff proposed increasing the IDR baseline used in financial policy from 200 new dwelling units to 300, reflecting multi-year permit averages (three-year average ~624 units; five-year ~668 units; 10-year ~860). Under the IDR policy, revenue above the baseline may be used for development-related one-time projects or positions that are contingent on development continuing.

Budget shifts and notable items: staff said utility-billing operations will be moved out of the general fund into a dedicated utility-billing/CIS fund; as a result, administrative transfer fees to the general fund will fall and the general fund ongoing expenses will decline accordingly. Moy also outlined proposed uses of a portion of increased property-tax revenue as partly ongoing and partly set aside for one-time items pending final certified assessed valuations in November.

Marijuana revenue and annexation: staff cautioned that state share-backs of marijuana excise tax were reduced in July from 10% to 3% and that retail marijuana tax receipts are declining; council later directed staff to pursue enclave annexation for two dispensaries, which staff said would add sales-tax revenue to multiple restricted funds.

Reserves and stabilization: staff said the city's health-benefit and liability funds maintain multi-million-dollar balances and that the general fund stabilization reserve could be fully funded to the target level (8%) by applying designated year-end balances, assuming no drawdown. Moy said staff might need to use some stabilization funds to smooth a shortfall depending on final July sales-tax receipts.

What happens next: staff will return with final assessed valuations in November, with updated revenue estimates; staff will bring proposed ordinances and the enclave annexation specifics back to council and provide follow-up analysis on the IDR policy change.