Aspen projects bigger 2026 capital spend as sales and lodging tax rebound

City of Aspen finance staff presented a financial update and the first of four budget work sessions on Oct. 6, telling the council the 2026 proposed budget relies on fund reserves to fund a sharp increase in capital spending while projecting modest revenue growth.

Tyler Sexton, interim finance director, reported taxable sales through July were “trending at 9% over 2024” and said the city’s move to state‑collected sales tax reporting in 2025 has captured additional filers that reallocated reported industry shares. Sexton said the new dataset produced a stronger and more accurate picture of local economic activity, though he cautioned that auditing authority now sits with the state and local verification of some filings is limited.

Why it matters: staff said Lumberyard, Armory Hall and the Water Treatment Plant would account for roughly 80% of the city’s 2026 capital program, and the council will use reserve balances to pay much of that work. Grauel and Sexton framed the budget as a deliberate move to deploy accumulated fund health toward priorities, rather than holding reserves idle.

Key figures and projections included a 2025 taxable‑sales forecast near $33.2 million with a preliminary 2026 projection around $34.2 million; staff said that could generate roughly $630,000 of additional collections in 2025 and another ~$568,000 in 2026. Sexton also presented lodging‑tax projections of about $13.1 million for 2025 and $13.4 million for 2026 and estimated the city’s investment portfolio had a book yield around 4.26% and an approximate market‑value portfolio near $385 million.

Capital planning: Matt Grauel, budget manager, outlined the large projects in the proposal: Armory Hall (design development complete, 2026 proposed budget $13,000,000), Lumberyard (vertical partner selected; $110,000,000 programmed from the housing development fund in 2026 contingent on a November ballot debt question) and the Water Treatment Plant. Grauel said some allocations in the 2026 budget reflect timing and cash‑flow assumptions and that actual spend could span multiple years.

Council questions focused on (1) why the city returned to state collections, (2) whether the state’s process adequately verifies filings, (3) the reasons for movements among industry reporting categories (for example, a large filer shifting from miscellaneous to construction) and (4) the timing of large capital allocations versus when cash will actually be spent.

Next steps: staff said night 2 will deep‑dive into capital projects and the 5‑year capital plan; night 3 will examine supplemental requests and proposed fee changes; and night 4 will include department breakdowns, guest presentations and follow‑ups. The council will revisit departmental operating breakdowns, fund‑by‑fund impacts and the Lumberyard debt schedule in subsequent meetings.