City Manager's Budget Message

Dear council and community members,

I carry many responsibilities as city manager but none, perhaps, as important as ensuring that money entrusted to us by taxpayers is spent wisely, strategically, and in response to community needs.

Today, I present you with a 2024 Recommended Budget that strives to do just that.

Its theme is: Honoring Our Commitments.

In the year ahead, honoring our commitments means sustaining investments that we have already made in response to some of the biggest challenges of our time: behavioral health; homelessness; ongoing financial stressors for vulnerable populations; climate change and wildfire risk; unsanctioned camping; and a lack of affordable housing.

This proposed spending plan recognizes that our community looks to their local government to be an innovator and leader on these issues. It supports this powerful work by giving these programs renewed, and in many cases, ongoing, funding. Whenever possible, it also seeks to address disparities and enhance equity in our community.

In short, this budget makes good on our promise to do better, to be better – in service to all.

Tough choices

As proud as I am of this proposal, its creation was not easy. The 2024 Recommended Budget represents a deep and collaborative effort to understand financial forecasts, assess community needs, weigh sometimes competing priorities, and make difficult choices.

The decisions are challenging because we’re blessed with a workforce and highly engaged community who continually generate creative and enticing ideas to make local government even better.

While the possibilities for enhancing our services are endless, funding is not.

This is certainly true as we look to 2024. The availability of library budget resources and additional property tax revenues are balanced by slowing sales and use tax revenue growth, uncertainty around overall economic conditions, and our responsibility to fulfill many existing commitments.

These commitments include continued funding for programs we started in 2022 and 2023 as we confronted the urgent needs of a post-pandemic world. We’ve also pledged to further the transformation of the old Boulder Community Hospital site on Broadway, between Alpine and Balsam, into a hub for affordable housing and consolidated city services. We’re acutely aware of the importance of maintaining and, in some cases, replacing, facilities that serve our community already, like recreation centers and fire stations. And we must continue to support our most valuable asset – our workforce.

This list alone requires us to be especially prudent in the upcoming year – and likely for the next couple of years.

On top of this, as we enter election season, we face uncertainty around a critical source of revenue. In November, Boulder voters will be asked to decide whether to renew at 0.15% sales tax that is set to expire in 2024. The item on the ballot commits to allocating 50 percent of this funding, if approved, to arts and the other 50 percent to the General Fund. If this measure is not approved, the city will need to make up the difference in funding to continue key service areas. Even if it is approved, current financial projections show the city will be limited to an average of $500,000 for any new ongoing programs or services within the General Fund over the next six years.

What this means is that we are making choices in a constrained environment, and we must be strategic.

We should, of course, explore new sources of funding, but we cannot simply hope that revenues increase or that taxpayers will bless us with more. We need to examine all our work with a critical eye and continue the approaches we started last year to budget for resilience. And as we gain better insights into programmatic outcomes, we must be willing to make courageous decisions to stop programs or services that are not meeting our expectations or are no longer necessary.

The 2024 Recommended Budget is a step in this direction.

Numbers, at a glance

The total 2024 Recommended Budget is $514.8 million across all funds. This budget includes a change in budgeting practice related to bond proceeds, primarily impacting Utilities, which makes the overall budget number seem lower than last year.

Excluding this adjustment, the total 2024 Recommended Budget is 4.7% higher than the 2023 Approved Budget. The total includes a 2024 Operating Budget of $374.1 million, representing a 5.5% increase over 2023, and a 2024 Capital Budget of $140.7 million.

It’s important to understand that the overall budget includes voter-earmarked revenues for specific city services and assets, including utilities, open space, climate initiatives, and capital projects promised through the 2021 Community, Culture, Resilience and Safety (CCRS) tax, for example. This revenue must be used for these purposes.

It also includes money set aside in reserves. Reserves create a safety net in case of emergencies or other unforeseen circumstances.

The General Fund is the portion of the budget that covers many of the city’s other function areas, including the maintenance of facilities, paths and parks, housing and human service programs, public safety, communications and more. This fund is largely driven by sales and use tax and property tax revenue, so the total amount can fluctuate from year to year.

Because the city has more discretion about how to allocate General Fund dollars, it can be helpful to focus most on the choices made in this area of spending.

The recommended General Fund budget for 2024 is $196.1 million. The total amount represents a 4.1% increase over last year’s General Fund.

More detailed information, including proposed spending by department, can be found on the city’s Online Budget Book. Department expenses and other budget overview items can be found in the Budget in Brief section.

The impact of the newly approved library district

There has been much anticipation around the dollars the city could have available now that voters have decided to form a library district.

The 2024 Recommended Budget estimates that the transition to a library district will result in an additional $9.2 million a year in the city’s General Fund. While it may be tempting to see this as a windfall, reality requires a measured approach.

The creation of the district is still underway, and the city remains responsible for providing services at the Main Library and all its branches until the transition is complete. The district is expected to reimburse the city for post-election operating expenses, but the total amount, estimated to be $13 million, and timing are still being negotiated.

Most of these resources will be necessary for obligations we have already made. Significant portions of this revenue are designated for the Community Assistance Response and Engagement (CARE) program, which will dispatch mental health clinicians and paramedics instead of police officers to certain types of calls ($2.1 million); a homelessness day services center ($1.6 million); and additional debt service for the development of the campus at Alpine-Balsam ($2.5 million).

The remaining amount ($3 million) is being set aside pending the result of the ballot initiative related to the expiration of the 0.15 sales and use tax. If the tax is not renewed or dedicated as the initiative proposes, the General Fund will need to utilize all or some of these funds to cover operations currently supported by the tax under its current structure. These operations include public safety services, homelessness programs, urban parks maintenance and more.

A decision-making framework

The 2024 Recommended Budget represents the second full year of implementation of Budgeting for Resilience, or outcome-based budgeting. It leans heavily into the city’s the Sustainability, Equity, and Resilience (SER) framework, which seeks to support actions that ensure Boulder is:

• Safe
• Healthy and Socially Thriving
• Livable
• Accessible and Connected
• Environmentally Sustainable
• Responsibly Governed
• Economically Vital

In preparing their budget proposals, departments were required to connect their work to this model and describe desired outcomes, as well as ways to measure whether the outcomes are being achieved.

The Budget by Goal Area page shows the city’s 2023 and proposed 2024 financial commitment by SER Framework area.

This year, the city also piloted a new approach for community engagement, partnering with community connectors-in-residence, a group of trusted residents who understand the needs of many of the historically excluded communities in Boulder. These community connectors spent considerable time learning about the city’s budget and providing carefully considered recommendations about the types of work the city should prioritize. I am grateful for their participation and thoughtful insights and

believe this proposed budget reflects their feedback.

Support for community priorities

Residents rely on local government for important day-to-day services, including clean drinking water, public safety, transportation, affordable housing, parks and outdoor spaces to enjoy, recreation facilities, and more. This recommended budget supports the basic continuation of these core services, while also seeking to address many complex issues.

Overall, the budget includes $21.1 million in proposed enhancements in service to community. The following is a summary, by topic, of some of the most significant expenditures:

• Behavioral Health Response - As previously mentioned, the 2024 Recommended Budget supports the implementation and evolution of the CARE alternative response program. The city is also continuing to fund the Crisis Intervention and Response Team (CIRT), which pairs mental health clinicians with officers for calls that may be higher risk and require a dual approach.

• Homelessness/Day Services Center Implementation - In January 2022, City Council established a two-year priority of creating space for day services for individuals experiencing homelessness. The goal is to provide support and resources during hours when the shelter is not open and to increase opportunities for individuals to transition to housing. Significant work was completed in 2023 to understand the need, identify a location and secure an operating partner. The 2024 Recommended Budget includes a total of $6.6 million: $1.6 million of that will support center operations; the remaining $5 million is for construction, tentatively slated for the fall.

• Ongoing Financial Stresses for Lower-Income Community Members - While much of the Boulder community is regaining stability after the pandemic, lower-income residents continue to struggle to cover basic needs. In recognition of this, the budget seeks to address disparities. A few examples include increases in health equity grants ($415,000); support for the Emergency Family Assistance Association’s (EFAA) Keep Families Housed Program ($137,000); money for critical home improvement and problem-solving efforts in manufactured housing communities ($525,000); and ongoing funding for community connectors ($50,000).

• Climate and Wildfire Resilience Work - In 2022, Boulder voters demonstrated ongoing support for vital work related to climate change, passing a $6.5 million tax that includes $1.5 million to enhance the city’s wildfire resilience initiatives. Revenue collected in 2024 will advance some of the highest priorities related to this topic. Commitments include the creation of a Community Wildfire Protection Plan, the creation of a community mitigation grants program, and the implementation of risk assessment software.

• Safe and Managed Public Spaces - Like many other communities across the country, Boulder continues to experience negative impacts related to unsanctioned camping, particularly along critical waterways and in shared public spaces. In April 2021, council approved a pilot program that sought to balance accountability with compassion in managing encampments. Between October 2021 and July 2023, a cross-departmental team cleaned up 1,185 unsanctioned camping sites and removed 240.2 tons of debris while connecting community members to critical services. The 2024 Recommended Budget calls for a $945,000 increase, and a total program budget of $2.4 million, to advance critical goals and outcomes, collect meaningful measurements, and make a full recommendation on the future of the program during the 2025 Budget development.

• Affordable Housing Initiatives - The affordability, or lack thereof, of housing continues to be one of the biggest challenges in Boulder. As such, innovative work in this area warrants significant investment. The 2024 Recommended Budget allocates $31.2 million to advance key initiatives that include the development of housing at Alpine-Balsam, a middle-income down payment assistance program, additional funding for permanently supportive housing vouchers, and staffing resources to facilitate code changes designed to provide more housing options.

Investments in employees and infrastructure

To serve community successfully, local government requires talented people and well-maintained infrastructure.

The 2024 Recommended Budget allocates more than $21.1 million in enhancements, many of which provide direct support to city staff. An additional $8.3 million is proposed to cover living wage increases for City of Boulder employees and contractors, using the criteria defined in a council resolution; salary increases for public safety and union personnel as required by renegotiated and approved contracts; and performance-based merits raises for non-union staff.

While we applied a critical eye to requests for new positions, the proposed enhancements include 33.5 new FTEs to meet the most urgent needs, primarily in Climate Initiatives, Open Space & Mountain Parks, Parks & Recreation, and Utilities. We will also continue to allocate resources for recruitment and retention, as well as increased professional and leadership development opportunities.

Turning to infrastructure, the 2024 Recommended Budget will make several necessary – and exciting – projects possible.

These include:

• 19th Street multi-modal improvements
• Design and implementation of vision at East Mapleton, Violet and East Boulder Community parks
• Potable Water Transmission System maintenance
• Barker Dam outlet rehabilitation and replacement
• Implementation of gateless parking infrastructure

Thanks to the additional CCRS funding approved by voters in 2021, the city will be able to provide grant funding to organizations that advance the goals of the tax while also supporting the following capital projects:

• Retrofits and renovations at the East Boulder Community Center
• Replacement of Fire Stations #2 and #4
• Completion of construction for Fire Station #3
• Streetlight acquisition and retrofits
• Planning, design, and construction for the Civic Area Phase 2 project
• Pearl Street Mall refresh
• Central Avenue bridge replacement
• Pavement management program support

Conclusion

In closing, I invite you to dive deeper into the 2024 Recommended Budget. I hope you will join me in feeling proud about the important work we have committed to, together, while also understanding the limited financial capacity the near future will hold. This spending plan holds both these truths in one hand.

Regards,

Nuria