2024 Budget in Brief - Continued

Sales & Use Tax Revenue

Sales and use taxes comprise 38.3% of the city’s total revenues, including utility revenues. Sales and use taxes are transaction taxes levied on all sales, purchases, and leases of tangible personal property and taxable services sold or leased by persons engaged in business in the city. The tax is collected by the vendor or lessor and remitted to the city. For every retail tax dollar collected in Boulder, the city retains 43 cents, which is distributed across the city’s General Fund, Open Space Fund, Transportation Fund, .25 Cent Sales Tax Fund (which supports Parks & Recreation), and the Community, Culture, Resilience and Safety Tax Fund (which supports capital infrastructure).

Projected sales and use tax revenues total $176.9 million in the 2024 Recommended Budget, including revenues within the General Fund, Open Space Fund, Transportation Fund, and .25 Cent Sales Tax Fund. In addition, the General Fund total includes revenues received from the 3.50% recreational marijuana sales and use tax. Projected sales and use tax revenues in the 2024 Recommended Budget exceed 2023 projected revenues, though the city is seeing signs of an economic slowdown.

The 2024 sales and use tax rate for the City of Boulder totals 3.86%. As shown in the Sales & Use Tax Components table below, 0.15% of the General Fund sales and use tax is planned to expire in December 2024 unless renewed through voter approval.

Over the next 15 years, the projected sales and use tax rate will include several changes, including:

• 2025: Overall sales and use tax rate declines due to expiration of a portion of General Fund tax.
• 2030: Portion of transportation tax shifts to General Fund.
• 2035: Portion of open space tax shifts to General Fund.
• 2036: Overall sales and use tax rate declines due to expiration of the .25 cent tax supporting Parks & Recreation.
• 2037: Community, Culture, Resilience, and Safety Tax expires.

Property Tax Revenue

Property values are reassessed in odd years, and are collected at their new assessed rate the following even year. 2023 was a reassessment year, and Boulder will collect property taxes based off the updated property value assessment in 2024.

The calculation for property tax is:

Market Value of Property x Assessment Rate x Mill Levy = Property Tax

The Assessment Rate is set by State legislation, and the mill levy is determined by the individual taxing authority.

As set by SB-238, for property taxes payable in 2024, the residential assessment rate is 6.765% and the commercial assessment rate for most sub-classes is 27.9%. For property taxes payable in 2025, multi-family residential property will increase to an assessment rate of 6.8% and the commercial assessment rate for most sub-classes will increase to 29%. Subclasses of commercial property used for agricultural or renewable energy production will continue to be assessed at a 26.4% rate. These assessment rates make no assumption on the possibility of voter action in November 2023.

SB-238 has also prescribed that the state treasurer will backfill cities meeting Boulder’s criteria at 65% of the decreased revenue from the impacts of SB-238 as one-time in 2024.

For example:

Residential: For every $100,000 of home value, home owners pay $78.80 in property tax to the City of Boulder.

$100,000 Assessed Value x 6.765% Assessed Value for Residential Property x .011648 mill levy = $78.80

Commercial: For every $100,000 in commercial value, business owners pay $324.98 in property tax to the City of Boulder.

$100,000 Assessed Value x 27.9% Assessed Value for Commercial Property x .011648 mill levy = $324,98

Overall, the citywide assessed value increased 32% over the 2021 Assessment.

For every dollar of property tax collected in Boulder through the general citywide tax rate, the city receives 13 cents. Of these 13 cents, 9 cents goes towards general city operations, 2 cents goes towards Public Safety, 1 cent goes towards Parks & Recreation and 1 cent goes towards the Community Housing Assistance Program.

In addition to the general citywide property tax, which is paid by every taxable property in the city, there are several special districts within the community that levy a separate mill rate. The revenue received from the Downtown Commercial District and the University Hill Comercial District are still restricted to the Denver-Boulder Consumer Price Index (CPI) and a local growth factor, as provided by the Taxpayers' Bill of Rights (TABOR) Amendment to the Colorado Constitution. In the November 4, 2008 election, city voters approved the removal of the remaining TABOR restriction on the general property tax with a phase-in period and without any specific restriction on the use of the "de-Bruced" funds. Forest Glen Special District supports Eco Passes for residents of that district and collects only enough to pay for that program.

The property tax chart below shows the past 3 years as well as the current year and next-year projected property tax collections.

Key Budget Assumptions

The summary of key assumptions table documents global budget assumptions that govern cost estimates provided by each department. For Police and Fire employees, the 3.5% increase represents an average of negotiated increases for 2024, which include 4% general salary increase and a 3% market rate increase.

Citywide Summary of Sources & Uses, by Fund