Lakewood releases conservative 2026 budget plan focused on core services, reserves

Lakewood City presented a proposed 2026 budget that prioritizes preserving core services, cautious revenue forecasting and measured one-time spending to advance selected projects while maintaining fund balance reserves.

City Chief Financial Officer Bjorklund outlined the plan Wednesday evening at a city council study session, saying the budget process gathered input from council, the budget audit board, community members and staff throughout the year. “This process requires collaboration and effective teamwork to create a budget that is sustainable,” Bjorklund said during the presentation.

The proposal relies on conservative revenue expectations amid uncertain national and state economic conditions. Staff told council that taxes remain the largest revenue source (54% of all funds) and that the general fund comprises roughly 52% of total city spending. Bjorklund said Lakewood’s revenue growth has weakened relative to inflation since 2021 and that sales, motor vehicle and use taxes were among the categories revised downward in 2025 and carried into the 2026 forecast.

The proposed 2026 budget would restore the property tax (mill levy) to 4.711 mills — a return to the city’s historical rate after temporary reductions in prior years, staff said. Bjorklund also described TABOR (the Taxpayer’s Bill of Rights, a Colorado constitutional amendment) constraints and the city’s plan for TABOR-restricted transfers: funds collected for 2017–2025 will be spent under prior rules and revenue from 2026 onward will follow the new rules because of a one-year lag in TABOR accounting.

Staff told council the city has 17 separate funds grouped into five types (general fund, capital project funds, enterprise funds, special revenue funds and internal service funds) and that maintaining healthy fund balances is a priority to weather downturns, respond to emergencies and preserve future flexibility.

Budget adjustments for 2026 include deferring some capital projects, revising personnel cost estimates and using targeted fund-balance draws for high-priority items. Bjorklund said about $4.8 million of fund balance is proposed for 2026 priority projects, including navigation center renovations and community support programs. The city also paused a general-fund transfer to capital improvement that had been made in prior years because the general fund could not support it while balancing recurring expenses.

Bjorklund reported the city is tracking 82 grants for 2025–26 and assigned them risk categories: 50 low risk, 20 moderate risk and 12 high risk. Staff presented dollar distributions across risk categories and said federal and state grant availability is shifting, reducing both the number and total dollars for some programs.

Councilors and department directors asked questions during the study session about reserve levels, how the city is balancing maintenance needs with new projects, and the use of one-time funds. Bjorklund and CFO staff explained that ongoing personnel and operating costs must be paid with recurring revenue rather than fund balance, and that the city must balance available staff capacity to deliver one-time capital work when setting budgets.

Looking ahead, council will hear the budget at the Budget and Audit Board meeting on Sept. 23 and at two public hearings — the first on Oct. 6 and the second on Oct. 20.

Details on where revenue and expenses were adjusted, the city’s multi-year forecast and the list of TABOR projects were presented in slides and the city’s budget book; staff made those materials available to council and the public as part of the study session materials.

Ending: Staff asked council to submit any additional questions in advance of the public hearings and reminded the council that the public hearing schedule allows further review and changes before final adoption.