The City of Boulder is facing growing financial pressure as revenue growth slows and uncertainty clouds the future of federal funding, according to new forecasts by city officials and researchers at CU Boulder’s Leeds School of Business.
The financial outlook is expected to shape key decisions for the city’s 2026 budget, which the Boulder City Council will begin reviewing later this summer. A tighter budget will likely force the city to cut funding for some programs to prioritize others.
“We are facing a moment in time that is truly difficult,” City Manager Nuria Rivera-Vandermyde told the council on Thursday. Earlier this week, she said she asked city departments to be more conservative with spending this year. “The year has simply proven to be more uncertain and volatile than any of us could have ever imagined.”
The forecasts are already influencing the November election. Councilmembers will decide whether to refer two tax measures to voters — one to extend an existing sales tax and another to create a property tax to fund parks and capital projects. Proponents of a separate initiative to close West Pearl Street to cars recently dropped their campaign, citing economic uncertainty.
Sales and use tax, the city’s main source of revenue, has plateaued. Between 2020 and 2023, it grew at an average annual rate of 9.2%, according to a recent city analysis. But from 2023 to 2024, that growth flatlined. At the same time, the city has lowered its property tax revenue projections due to state legislation that reduced assessment rates.
The trend isn’t new. Last year, Rivera-Vandermyde proposed a “constrained” 2025 budget in response to the slowdown in sales tax revenue and the end of federal pandemic stimulus funding. But this year’s budget cycle is further complicated by instability at the federal level.
President Trump’s trade wars could drive up construction costs just as Boulder ramps up investments in major infrastructure — including flood mitigation, transportation safety and the redevelopment of the Alpine-Balsam site for a new city services campus and affordable housing.
While some grant-funded infrastructure projects may be less affected by tariffs due to “Buy America” provisions that require domestic sourcing of certain materials, city officials say a large portion of federal funding remains in limbo. Roughly half of the federal money recently awarded to Boulder — about $55 million — has yet to be disbursed and could be vulnerable to future cuts, according to a city analysis released in March.
Another concern is the potential loss of the federal tax exemption for municipal bonds — a key financial tool for cities. The exemption lowers the city’s borrowing costs because investors accept lower interest rates in exchange for not paying federal tax on their returns.
All of this comes as the city seeks to tackle a backlog of $380 million in unfunded projects.
Additionally, Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business, said Boulder’s economy faces unique risks in the coming years — including more potential layoffs at CU Boulder and federal research labs like NOAA.
Still, the Leeds researchers and city officials forecast that sales and use tax revenue could rebound in the next few years. One potential driver: a rollback of tariffs, according to Lewandowski.
“Those worries could go away. Consumption could flow again. Trade could flow again,” he said. “But I think in the short run, there’s damage that’s already been done.”
As a city, stop buying stuff you don’t need. Most cities have this problem, of taking money from constituents, and expecting a forever fountain of free money to siphon on inefficiently. This is not unique to boulder, and not sustainable. Most places were only able to keep the ponzi scheme going by 40 years of lower and lower interest rates to get more debt and refinance, whether at the city level or the individual who had more funds to offer up. That has reversed, so get used to it
So kill interesting small businesses. Make driving and parking miserable. Build more ugly box buildings. Raise property taxes to unaffordable. Don’t fix potholes. Block businesses with endless construction projects. And sob in your pillows. Yep
I’m no financial expert, but I don’t understand the reluctance to tax unused 2nd homes. The city estimates there are 4000 of them, and they could just decide to put a fee on them without even having to go through the ballot initiative process. So they have a viable tool but for some reason think that the empty home fee would be less palatable to residents than imposing a new property tax? They first thing to do would be the tax or fee on empty homes. The city needs to stop prioritizing wealthy part-time residents and start caring more about the rest of us.