Though the city of Greeley and state of Colorado are seeing a continued upward trend in the economy as wages continue to surpass inflation, city council members were troubled on Tuesday by news that key funding sources for the city aren’t hitting their expected marks.
During the city’s third quarter financial update, city staff shared the highs and lows of city revenue from Jan. 1 to Sept. 30 that indicated building revenue, which includes permit costs and development fees, and sales tax both fell short of what had previously been budgeted. Finance Director Tyra Litzau was quick to mention that sales tax revenue, the city’s largest funding source, increased from 2023 by about 4.4%, but it’s just not rising as fast as staff thought it would.
“Growth is expected to slow, but there is nothing to suggest a decline or recession,” Litzau said. “We are still growing. It’s just not growing as fast and by as much as in the past.”
Council members focused on the dip in building revenue, as early projections for the end of the year had building revenues coming back at about $24 million below what the city had previously budgeted for. This could be due to less new construction, changes in the factors used to make those budget determinations and many other reasons, city staff reported Tuesday.
Despite this indication that building revenue is dropping from a high in 2022, the city has budgeted $31 million in anticipated building revenue for 2025. This is lower than the 2024 budget for building revenues, but Councilman Dale Hall still questioned Budget and Policy Director Caleb Weitz as to why they would continuously budget for higher revenue than they’ve been receiving.
“Looking at the forecast and what we think could occur next year in terms of development activity, we felt comfortable with the budget estimates,” Weitz said. “But we also have the revenue stabilization budget in case we fall short of that.”
Mayor John Gates also speculated that the optimistic budget could be supported by several projects before the city that will likely be permitted in 2025. Weitz agreed that could be factoring into it but noted that many other pieces of data are taken into account when creating the budget.
Though the city is currently $24 million below its budgeted building revenue, city staff remain optimistic about a turnaround from October to the end of December. Staff estimate that the difference will fall to only $18 million by the end of the year and reassured the council that the shortfall won’t affect any city services. But it could lead to delays for future capital projects, staff warned.
Councilwoman Deb Deboutez seemed particularly displeased by this news, suggesting further action should be taken to ensure the budgeted revenue is closer to what it actually ends up being.
“In the three years I’ve been on council, we’ve consistently estimated higher building revenue than what we’ve achieved,” Deboutez said. “Maybe we need to get an economist to help figure out what’s going on with that because we’ve missed the mark for three years so far.”
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