Broomfield officials flag 2026 draft budget as "fragile" after $6 million property-tax hit and sales-tax softness

BROOMFIELD, Colo. — City and county finance staff told the Broomfield City Council during a study session that the draft 2026 budget is facing substantial revenue headwinds, including an estimated $6 million drop in property-tax revenue tied to new assessment rates and recent reassessments, and weaker sales- and use-tax receipts that together make next year’s budget “fragile.”

The council received the forecast Wednesday from Jeff Romine, the city’s economist; Graham Clark, director of finance; and Nathan Mosley, budget manager, who outlined a revenue-first approach to the draft budget and described near-term steps departments will take while staff finalizes proposals for council review in August and a preliminary budget in early September.

Why it matters: General fund services that rely on property, sales and use taxes — including police, library and human services — account for more than half of the city’s operating revenue, officials said. A sustained shortfall in those sources would require spending reductions or other changes to maintain long-term fiscal stability.

Romine, who led the economic overview, said the city’s fiscal posture has shifted from “stable but fragile” to “fragile.” He told the council that the city expects sales tax to be essentially flat in 2025 compared with prior forecasts and that the revised forecast for 2025 sales-tax receipts is lower than the amount adopted in the 2025 budget. “We have moved from stable but fragile into fragile,” Romine said.

Mosley reinforced the dependence on three revenue streams. “Between those three, it makes up over half of the revenue that supports general fund services,” he said, referring to property, sales and use taxes and to the importance of charges for services such as recreation fees.

What changed: Clark and Romine said two developments increased downside risk for the 2026 forecast. First, state-level changes passed in the recent legislative session reduced assessment rates for residential property to 6.25% for the next valuation cycle; second, the assessor completed valuations as of June 30, 2024, producing lower assessed values in some sectors and a wave of appeals is expected. Romine said the combined effect of reduced assessment rates and the new valuations translates to an estimated roughly $6 million reduction in property-tax revenue between 2025 and 2026.

Romine gave additional figures that staff used in planning: a roughly $3 million downward revision in sales-tax receipts from previous budget expectations for 2025 and an expected $0.5 million reduction in vehicle-related use taxes in the revised 2025 estimate. Clark summarized the aggregate near-term impact as a $3.5 million reduction in revenues for the current year and another roughly $4 million reduction in 2026 under staff’s current assumptions.

Staff response and near-term measures: Clark and Mosley outlined a suite of actions and planning steps staff is taking while they finish revenue estimates and departmental requests:

- Reduce nonessential spending (targeted reductions in travel and training budgets, with staff estimating roughly $1 million in savings if those reductions are realized). - Re-evaluate professional-services spending and other discretionary lines. - Review vacancy and hiring: departments have been asked to consider holding vacancies where feasible; staff stressed essential positions tied to public health, public safety and critical infrastructure will be prioritized. - Maintain operational reserves (the city’s reserve policy target is 20% of operating expenditures) and use a “bucket methodology” to prioritize mandates, obligations and critical needs.

Clark said personnel costs remain the largest share of the budget and will be a primary focus: “Personnel costs are the organization’s largest expense,” he told council. He and Mosley also said employee merit pools and related compensation decisions will be reexamined as part of budget development.

Uncertainty from federal and state actions: Council members repeatedly raised concerns about possible federal budget cuts and tariff policies that could ripple through the local economy and further depress revenue. Romine and staff said the city is monitoring federal and state developments weekly and will update revenue projections as new information becomes available. “There are places I just don’t know yet and we’re not going to know,” Romine said, describing near-term uncertainty around tariffs and federal budget timing.

Enterprise and capital plans: Staff said enterprise funds (water and wastewater) are being managed separately from general fund planning; two bonds to finance water and wastewater projects are planned, and enterprise rates and bond proposals will be brought forward in quarterly updates. Council members and staff also discussed a planned general obligation bond for the police facility (and a related court remodel), which staff said was budgeted with multi‑year debt capacity and is expected to begin impacting the general fund later in 2026.

ERP implementation and efficiencies: Council asked whether a planned enterprise resource planning (ERP) replacement expected in 2026 would produce staff savings. Clark and Manager Hoffman said the ERP is an investment in accuracy and transparency but is not likely to deliver near-term headcount reductions; implementation itself requires significant staff time. “The ERP is not a cost‑savings endeavor,” Clark said, adding the system should improve reporting and accuracy but is not expected to replace multiple staff positions.

Next steps and process: Staff will continue working with departments over May and June, bring an update to council in August, present a preliminary draft in early September and hold formal readings and adoption in October. No formal votes or budget decisions were taken at the study session; council directed staff to continue refining revenue projections and departmental options.

What council members pressed: Several council members asked for clearer reporting that shows how capital projects have moved year to year, for department‑level scenarios that illustrate what specific service reductions would look like, and for contingency planning that explains how the city would respond if federal or tariff shocks deepen. Staff said departments are reviewing service levels and that staff will return with options and timelines.

No formal action was taken at the study session; staff will return with refined revenue estimates and draft budget options in August and September for council review and formal action later in the fall.