Fort Collins staff says 2027-28 budget will focus on realignment amid service tradeoffs

Fort Collins staff told council Tuesday that the city’s 2027-28 budget is taking shape as a financial realignment rather than either a growth budget or a traditional cuts budget. Staff said the city is still seeing revenue growth, but not enough to keep pace with rising ongoing costs, after years of relying on reserves and one-time money to maintain service levels.

Melanie Potyondy said Fort Collins’ long-standing sales-tax edge over neighboring communities has largely stabilized at a lower level than it once was. Before 2010, she said, the city generated a disproportionately high share of county taxable sales relative to its population, helping fund many of the facilities and service levels residents now expect. That advantage narrowed as surrounding communities developed more of their own retail and online shopping shifted tax collections to where goods are delivered, she said. Starting in 2020, Potyondy said, the trend began stabilizing significantly, but that means the city now has to rebalance many of its ongoing financial commitments.

Potyondy said reserve balances in the general fund have been drawn down and can no longer be counted on to make the budget work. She noted that the city closed an anticipated $15.5 million shortfall in the current budget through revisions made last year, but about a third of those savings were one-time measures, including a hiring freeze that will not permanently reduce costs once positions are filled. For the coming budget cycle, she said, departments were required to submit proposals equal to 8% of their ongoing budgets, a process meant to expose where the city can find efficiencies and where it would need to reduce service levels.

The tradeoffs under review include changes residents would notice. Potyondy cited the possibility of reducing street sweeping by one cycle per year and shifting the cost of maintaining paved trails in natural areas onto Natural Areas funding rather than using more flexible city resources. She said staff also is trying to protect core obligations such as public safety and services for vulnerable populations while moving toward a more priority-based budget process.

At the same time, new investment needs are competing for limited ongoing capacity. Potyondy said those pressures include inflation, labor costs needed to remain competitive in the job market, replacement of the city’s aging enterprise resource planning system, and emerging needs in cybersecurity, data and artificial intelligence. She also pointed to new operating costs tied to the Southeast Community Center after the city broke ground on the project.

The city is also weighing how to handle one-time capital needs, especially facility maintenance. Potyondy said departments identified nearly $10 million in requested asset-management projects this cycle, largely for items such as roof and HVAC replacements. City Manager Caleb Weitz said Fort Collins has lagged on facilities investment and that a more conservative approach to aligning revenues and expenditures could put the city in a stronger position to address those one-time needs in future years. He added that the city still lacks a dedicated ongoing funding source for some asset-management work, an issue he said will remain central as broader capital planning moves forward next year.