Littleton finance staff warn of multi-year general-fund gap; vacancy management and targeted cuts proposed

City finance staff presented a high-level general-fund update and outlined steps intended to produce a structurally balanced 2027 budget without layoffs.

Budget Manager Kevin Orton told council preliminary 2025 actuals totaled about $58.7 million in general-fund revenue, roughly $400,000 below a $59.1 million estimate, and that expenditures came in favorably overall. Orton said a revised five-year model shows a $6.6 million negative change in fund balance for 2026 driven in part by $1.2 million in carry-forwards and an approximate $1.7 million timing delay related to the Mineral Place retail opening.

Orton and Finance Director Laurie Mata described staff strategies to close the near-term gap: targeted adjustments to known line items, disciplined vacancy management (holding certain positions open where feasible), and maximizing the use of restricted funds before drawing from the general fund. City Manager (role) said staff’s priority is to avoid layoffs and preserve competitive pay; he said the leadership team will use those non-layoff strategies first and return to council with options in September.

Staff said the city is planning to present a structurally balanced 2027 budget (no use of fund balance) and that the budget retreat is scheduled for September 12. Orton explained the city’s conservative assumptions include 2.5% base sales-tax growth (down from a prior 3%) and a cautious timeline for retail revenues from Mineral Place (Costco moved from an August opening assumption to Q1 2027 for modeling purposes).

Several council members pressed for clarity on which departments would bear vacancy management impacts, and on whether critical services (notably public safety) would be held harmless. Staff said higher-turnover, larger departments such as public works and police are being reviewed and that directors will assess service impacts before positions are held. Council member Reichardt said he will not support a 2027 budget that is not structurally balanced.

Staff also discussed reintroducing priority-based budgeting or a similar strategic-budgeting method after systems upgrades are complete; staff recommended re-evaluating the approach in 2028 after completing Workday financial optimization, a project-management information system (PMIS) rollout and public-works engineering reimagining.

Council received the update and asked questions; there were no final budget votes tonight. Staff will continue to model options, hold certain vacancies, and return to council with a proposal and supporting materials ahead of the September budget sessions.