City of Boulder officials have identified a $6.5 million shortfall in the 2027 budget, setting the stage for another tight budget year as key sources of city revenue are not keeping pace with expenses.
The economic outlook builds on several years of relatively slow revenue growth. For the first time since the start of the Covid-19 pandemic, Boulder’s city manager last year recommended cuts to General Fund spending, the city’s largest source of discretionary money, to help close a $7.5 million shortfall in the 2026 budget.
For the latest potential gap, the city manager has asked all departments to prepare ongoing 4% reductions, with an emphasis on permanent cuts, according to a presentation from city officials to the Boulder City Council last week.
“It is a hard conversation that we will be having again,” City Manager Nuria Rivera-Vandermyde told members of the Boulder City Council last Thursday.
Sales tax revenue has flattened in recent years. In 2025, sales tax revenue, the city’s largest single source of money, came in below projections used in the budget. At the same time, the city has lowered its property tax revenue projections due to state legislation that reduced assessment rates.
One driver of the flattening sales tax is the shift to remote work, which has reduced downtown foot traffic and consumer spending. About 30% of downtown offices are vacant, according to a recent report by The Colorado Group, a local real estate firm.
Boulder is also experiencing the effects of a broader national slowdown in retail sales growth and rising inflation. Colorado gas prices rose 93% from January to May, reaching $4.50 per gallon, due to the war in Iran, according to a presentation from CU Boulder’s Leeds School of Business.
“People feel like they may need to hold back more or change their spending patterns,” Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business, told councilmembers.
Sales tax growth does appear to pick up slightly in 2028 based on projections. “We have slow but steady growth throughout the horizon,” Lewandowski said.
In 2025, Boulder’s year-over-year sales tax growth lagged behind Colorado and many Front Range communities, according to a Leeds School of Business presentation. Among the factors particular to Boulder, the Leeds School of Business cited the high cost of living, housing prices and the concentration of tech jobs, which have been hit by recent layoffs. The Trump administration is also seeking to dismantle the National Center for Atmospheric Research, and some uncertainty persists at the National Institute of Standards and Technology.
The Leeds School of Business cited the Sundance Film Festival, which will debut in Boulder in January 2027, as a potential revenue opportunity, but city officials said they will incorporate the festival into the sales tax model only when actual revenue from the event materializes.
“We are taking a realistic approach in year one of Sundance … and making sure that we do not overprogram any revenue that we have not yet received,” Scott Carpenter, the city’s principal budget analyst, told councilmembers last week.
The city has separately identified $400 million in unfunded needs for facility renovations or replacements, including repairs for its recreation centers. Councilmembers last week directed city officials to poll likely voters on potential measures to raise property taxes and take on debt to help cover this funding gap.
