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Boulder hears CU economic update; city revises 2025–26 revenue forecasts downward
Summary
University of Colorado economists warned of near-term downside risks from tariffs, inventories and falling consumer confidence while city staff revised sales, use and property tax estimates downward for 2025–26 and urged program realignments rather than new spending.
Boulder City Council members heard a regional and local economic briefing May 8 from University of Colorado Boulder researchers and the city’s budget team that left staff more cautious about near‑term revenue growth and led to revised forecasts that reduce projected 2025–26 revenues.
The university presenters said national indicators show growing downside risks — including a first‑quarter GDP decline, record import and inventory spikes tied to tariff anticipation, and sharply lower consumer and business sentiment — even while employment and wage growth remain resilient. CU presenters Brian Ludenkowski and Richard Wobekind told council the university’s preferred scenario sees a modest national slowdown this year that would be reflected in flatter local revenue growth.
City budget staff said the city has revised its sales and use tax forecast downward, cutting the 2025 estimate across city funds by about $5.8 million and the 2026 forecast by about $5.1 million. Staff also reported the 2025 property reassessment cycle produced effectively flat assessed value growth and that state legislation (referred to in staff materials as HB 24b101) and lower assessment rates reduce 2026 property tax projections by roughly $5.4 million across funds. Charlotte Heskey, the city’s budget officer, and other staff framed the revisions as a reason to avoid new ongoing program spending and to emphasize “realignments” and organizational resilience while the city refines its long‑term financial strategy.
Council members asked how the city accounts for changing patterns of remote work, which industries are most exposed if federal research spending contracts, and how quickly labor‑market shocks would show up in local data. CU economists said some impacts (for example, federal severance timelines) could show up over months and that a cliff effect is possible later in the year if layoffs and severance roll off.
Council, staff and CU agreed on several practical points: the city’s sales‑use tax model ties local receipts to national retail activity (using Moody’s Analytics alternatives for baseline/optimistic/pessimistic runs); local exposure to tariffs is largely indirect (via national supply chains); and that the city’s tax and revenue picture will be revisited before July decision deadlines. New CFO Krista Morrison was introduced to council and staff urged patience while she settles into the role.
Staff said they will update the revenue forecast again ahead of July budget decisions and emphasized that the revised outlook leaves limited ongoing funding for new programs, making program realignments, fee reviews and community conversations on service levels the primary tools for 2026 budget work.
Council members and staff flagged areas to watch: potential federal funding contractions affecting research and labs, the effect of tariffs on construction input prices (lumber, steel), and the degree to which households may pull forward durable‑goods purchases (blunting future sales). The city will use updated forecasts to inform the July budget decision package and the Fund Our Future community process scheduled for June–October.
