The 2023 Recommended Budget totals $513.5 million and represents an 11% increase over the 2022 Approved Budget for all funds, including Governmental, Enterprise, Special Revenue, Internal Service, and Capital Improvement funds. This increase is due to several factors, including the continued restoration of programs and services that were scaled back during the pandemic, inflationary impacts that increased the cost of maintaining the City's current service levels, strategic investments that introduced new programs, the extension of the 0.3% Community, Culture, Resilience, and Safety Tax that allows for strategic citywide and community capital investments, and structural budget changes to the appropriations process to better align mid-year budget increases to the annual budget submittal.
The 2023 Operating Budget of $354.2 million represents an 18% increase compared to the 2022 Approved Budget. In addition, the 2023 Capital Budget of $159.3 million represents a slight 2% decrease compared to 2022, primarily due to the significant Utilities' bond appropriation adopted with the 2022 Approved Budget. The 2023 General Fund Budget totals $188.0M, representing a 14% increase from the 2022 Approved Budget.
The Budget in Brief provides a breakdown of citywide sources, or revenues, and uses, or expenditures, within the 2023 Recommended Budget.
The 2023 Recommended Budget is based on projected citywide revenues of $491 million, representing a 3.6% increase from the total revenues included in the 2022 Approved Budget. Recovering from the pandemic, the City used a cautious approach in revenue projections for the 2022 Approved Budget. This was intentional due to the uncertainty related to revenue collections, especially as it related to the volatility of local sales & use taxes, the City's primary revenue source. Revenue projections included in the 2023 Recommended Budget represent continued recovery from the pandemic with many revenue sources returning to or above pre-pandemic levels. While the revenue forecasts will provide some optimism about organizational recovery, there are other economic concerns to consider, including high inflation, continued supply chain issues, and international conflict. Despite potential headwinds, staff believes the steps taken to invest in community priorities in 2022 and within the upcoming 2023 budget will represent a road to recovery in Boulder.
As standard practice in the budget, expiring taxes for the upcoming fiscal year are not represented within the budget package. For example, the expiring Community, Culture, and Safety Tax was not included in the 2022 Approved Budget as appropriation waited until after voters approved the renewal of the tax in November 2022. As the tax was extended by voters, those corresponding revenues are included in the 2023 Recommended Budget.
In 2023, the current Climate Action Plan (CAP) tax expires (a tax on electricity use) which funds approximately $1.8 million in climate related work. The expiring tax revenue and investments that would be covered by the tax are not represented within the 2023 Recommended Budget. The expiring CAP tax is being proposed as a new climate tax that would replace both the existing Utility Occupation Tax (expiring in 2025) and the expiring CAP tax and generate additional revenue to address climate related work, including critical wildfire resilience needs.
Looking ahead, the next significant tax expiration is a 0.15% General Fund sales tax expiring December 31, 2024. This is a critical tax to fund core general fund operations and staff plans to begin conversations on the renewal process in 2023.
Additional detail on the City's primary funding sources, sales & use taxes and property tax, can be found on the 2023 Budget in Brief - Continued page.
Combined Budget Summary - Sources
The total revenue budget of $491 million differs with the total sources within the below Combined Budget Summary table because the total revenue budget of $491 million does not include Internal Services funds and transfers between funds, with the exception of the transfer to the Medical Insurance Fund. Internal Service funds and transfers are excluded to avoid double counting revenues in originating and receiving funds. Thus, the total revenue budget figure of $491 million reflects the total anticipated revenues to perform city services for the 2023 fiscal year.
Citywide Sources excluding Utilities
The chart below represents citywide revenue sources without Water, Wastewater, or Stormwater/Flood Management Utilities Funds. Utility rates are based on use of the systems and are not reflective of economic conditions. Excluding Utilities, the two largest revenue sources are sales and use taxes and property tax, representing 63% of total revenues for the 2023 Recommended Budget.
General Fund Sources
The 2023 Recommended Budget is based on projected General Fund revenues of $179.3 million, which represents a 7.6% increase from total revenues approved in the 2022 Budget. This increase is largely due to the anticipated increase in sales and use taxes as the economy completes its recovery from the pandemic. Property tax continues to be a stabilizing force in 2023 that provides a steady stream of revenue for the city, which comprises 23% of all General Fund revenues.
The 2023 Recommended Budget is based on projected citywide expenditures of $513.5 million, representing an 11% increase from the total expenditures in the 2022 Approved Budget. There are several structural changes that are reflected in the way that the city calculates expenses from previous years.
- The Community, Culture, Resilience, and Safety (CCRS) tax, a 0.3% dedicated sales and use tax, was renewed by voters in November 2021. Following standard practice, the approximately $13.5 million in annual revenue was not reflected in the 2022 Approved Budget. This will increase available revenues for the eligible uses outlined in the ballot measure. Included in the 2023 Recommended Budget is $29.1 million in expenditures from CCRS for several citywide capital projects and the implementation of the community non-profit grants program.
- The development of the 2023 Recommended Budget includes some structural budget changes to the appropriations process to better align mid-year budget increases to the annual budget submittal. In prior years, departments submitted mid-year adjustments for grant revenues as well as unspent funds from the prior fiscal year. In an effort to reflect mid-year adjustments, including grant revenues, that are consistently expected on an annual basis and provide greater clarity for expected investments, several large expenditures are now included in the recommended annual budget. Specifically, approximately $16 million in appropriation is added to the Housing & Human Services Department compared to the 2022 Approved Budget as a result of this structural budget change. This appropriation had previously been submitted as a regular mid-year adjustment.
- Two significant mid-year budget adjustments took place after Council's adoption of the 2022 budget, including the special adjustment-to-base in March 2022 and the regularly scheduled first budget supplemental in May 2022. The mid-year adjustments invested in key areas, such as housing and human services, to help expedite the restoration of City programs post-pandemic. Examples of these off-cycle investments include key Council priorities such as the middle income down payment assistance and an inclusionary housing strategic plan.
As a part of the new budget process, the Central Budget Office worked with departments to analyze base budgets in greater detail to ensure adequate resources to maintain current services. A few factors drive the increase of the base budget, including the impact of inflation, insurance cost increases, and strategic investments in city staff and staffing capacity.
While there is a positive impact on revenues from high inflation, certain projects and services are also experiencing increased costs. Several capital projects have tapped into budget contingencies in support the increased construction costs. In 2023, the budget includes an increase to support higher contractual obligations in maintenance and other contracted services.
Despite robust and proactive risk management strategies, the City experienced a significant increase in insurance premiums in 2022 and 2023, especially in property and general liability. While increases in general liability insurance reflect regional and national trends, the enhanced disaster risk due to climate change and wildfire impacts are the main drivers of the increased cost of insuring our properties.
Combined Budget Summary - Uses
The total budget of $513.5 million, referenced above, differs with the total uses within the below Combined Budget Summary - Uses table, totaling $596.9 million, because the total budget figures do not include Internal Services funds and transfers between funds. Internal Service funds and transfers are excluded to avoid double counting expenditures in originating and receiving funds. Thus, the total budget referenced above of $513.5 million reflects the true cost of the organization's operations by excluding double-counted expenses between funds, and reflects total anticipated expenses of performing city services for the 2023 fiscal year.
Additional detail on the City's key budget assumptions and a summary of all funds subject to appropriation can be found on the 2023 Budget in Brief - Continued page.
Citywide Uses, Excluding Utilties Funds
The 2023 Recommended Budget, excluding the 3 Utilities Funds, totals $379.6 million, representing a 30% increase from the 2022 Budget. The figure below represents citywide expenditures without Water, Wastewater, or Stormwater/Flood Management Utilities Funds, which are supported through user fees. The below graph does include some expenditures aligned to the Utilities department but not funded out of the department's three enterprise funds.
General Fund Uses (Expenditures)
The 2023 Recommended Budget is based on projected General Fund expenditures of $188.0 million, representing a 14% increase from total 2022 General Fund Approved Budget. This increase is attributed to restoration of city services and programs to pre-pandemic levels, a greater than usual increase to the city's base budget due to inflationary impacts, as well as strategic investments in community priorities such as Homelessness Services, Wildfire Resilience & Emergency Response, Alternative/Behavioral Health Response, and other key enhancements.
Staffing Levels by Department
The 2023 Recommended Budget includes a total city staffing level of 1,540.09 full-time equivalents (FTEs), an increase of 3.2% from 2022 Revised staffing levels; this includes a total of 46.38 new FTE across 15 departments. These staffing increases bring the organization back to pre-pandemic staffing levels, as well as making strategic staffing capacity increases to reflect new community investments and programs, such as the opening of the North Boulder Library. A calculated estimate of 184.58 non-standard staff, or seasonal and temporary employees, is included in the 2023 Recommended Budget, mostly within the Open Space and Parks & Recreation Departments. Non-standard staff provide a needed supplement to standard staff on a seasonal basis, largely in the summer.
One measure of personnel cost pressure is the size of city staff, which is measured by standard full-time equivalents (FTEs). The 2023 Recommended Budget includes a citywide staffing level of 1,540.09 FTEs. As seen in the chart below, the city manages staffing levels in connection with changing economic conditions and revenue projections. In 2022, the City restored staffing levels back to pre-pandemic levels, and in 2023 revenue growth projections have allowed for new program investments that include staffing increases.