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Loveland quarterly report: city projects a $5.2M favorable variance but warns it follows a permanent $10.4M sales‑tax reduction
Summary
City finance staff said first‑quarter 2025 results leave the general fund with a projected $5.2 million favorable variance heading into the 2026 budget workshop, but they warned this follows a permanent $10.4 million reduction in annual sales‑tax revenue after a 2023 ballot change.
City finance staff briefed the Loveland City Council on first‑quarter 2025 financial results and a projection staff plans to use for the 2026 budget workshop.
Chief Financial Officer Brian Waldes said the general fund’s current, unaudited position shows a projected positive variance of about $5.2 million heading into the 2026 budget discussion. He cautioned that the city’s long‑term finances reflect a $10.4 million annual reduction in general‑fund sales tax revenue after a November 2023 ballot change that removed sales tax on food for home consumption; 2024 collections reflected that new, lower base and Q1 2025 shows a continuation of that level.
Waldes reviewed revenue components and timing effects: sales tax is the largest single revenue source and is on track to meet the adopted 2025 budget on a cash‑basis view; property tax timing creates large monthly swings; building‑materials use tax and auto‑use tax are comparatively small. He cautioned that some early variances are timing related and that capital spending can quickly consume fund balance if projects accelerate.
On reserves and liquidity, Waldes reported an investment portfolio of about $358 million (largely held for enterprise and utility funds) and reiterated that invested balances are not “extra” discretionary cash but include restricted and enterprise funds; the city’s operating‑reserve component is a subset of the total portfolio. Staff recommended a focused council briefing with financial advisors on the investment portfolio rather than treating the portfolio as an unrestricted surplus in quarterly materials.
Waldes said the $5.2 million variance is a useful planning figure but urged caution: the general fund is large (staff noted the fund’s size) and a modest percentage downturn in revenues could erase the variance quickly. Councilors asked for follow‑up: staff agreed to return with a more detailed review of tax‑increment/TIF impacts and of Fund 603 (LURA) balances and to provide additional detail on the mix of revenue contributors and how one‑time items affected 2024 results.
A public commenter asked for clarification of “pending ordinances not yet appropriated”; staff said those items related to listed agenda items at the time the packet was prepared and that most had been approved at a subsequent meeting. The report was informational; no budget or policy changes were adopted at the study session.
