Realistic revenue forecasting is essential to sound financial planning. Revenue forecasting becomes more difficult in times of economic uncertainty and change. The Finance Department utilizes a number of techniques in projecting revenues, depending on the each revenue sources characteristics.

• Informed/Expert Judgement – internal sources such as department heads and external consultants

• Formulas determined by City ordinances

• Moving averages

• Estimates from the State of Colorado and property valuations provided by the El Paso County Assessor’s Office

Due to State constitutional restrictions, property tax revenues continue to be very stable. Sales tax revenues continue to trend upward with the additional revenues from online retailers. Franchise fees are estimated based on current contracts. Other revenues are estimated from various sources such as the State (HUTF) and Fort Carson (Intergovernmental support agreement) and the knowledge of various department heads and the anticipated activity in their departments (i.e. Parks, Recreation, Courts,etc.)

NOTE REGARDING TABLES IN THIS DOCUMENT : As with all tables provided in this budget document, additional infomation and details may be readily obtained. In addition, every data table that is not an excel copy, is expandable and may again be collapsed. This may be done by clicking on the "Collapse All" or "Expand All" description at the top of each table. By clicking on the arrow to the left of each account description, additional breakdowns of revenue and/or expense may also be seen.

The following describes each revenue source. All suggested departmental revisions from the initial proposed 2024 budget are indicated in bold narratives at the end of each description.

Sales Tax is by far the largest revenue source within the General Fund and projected to be 51% of total General Fund revenue in 2024. The sales tax rate for the City of Fountain is 3.40% of which 3.0% is dedicated to the General Fund When combined with the State of Colorado sales tax of 2.9% and El Paso County sales tax of 1.23%, the businesses located in Fountain are collecting a total of 7.53% except for South Academy Highlands (Sam’s / Walmart site) which is comprised of City, State and County tax of 7.53% plus a 1% PPRTA tax and a .5% Public Improvement Fee (PIF). The .5% PIF fee amount is added into taxable sales before the 8.53% tax is calculated to which generates an 8.574% rate. The City retains .5%, for the General Fund, and remits the remaining 2.5% to Fountain Urban Renewal to pay off bonds issued for the project.

The State Colorado Department of Revenue collects sales tax for the City. Sales tax payments are due to the Department of Revenue by the 20th of the following month and the City receives the distribution from the Department of Revenue around the 12th of the following month. There is a two month lag in receiving the sales tax from the time the business collects the tax to when the City receives the tax.

The trends are good, particularly with the advent of online sales tax revenue as a result of the Wayfair decision to tax online retailers locally. However, the City is heavily reliant on sales tax for operating expenses within the General and the Transportation Sales Tax Funds.

Based on the rapid rise in internet sales, the increased growth in population and the inflationary increases being realized in prices of goods, the trend in sales tax revenue is positive. Sales tax revenues for 2023 are 3.9% over 2022 for the first half of the year. We are therefore conservatively anticipating an approximate 2% increase over 2023 projections through 2024.

The use tax rate for the City is 2%. The two major sources of use tax are new construction and vehicle purchases.

The current trend in use tax revenue is slightly negative, primarily due to the slowdown in housing construction, due to higher mortgage rates. . We have therefore decreased our projection by $100,000.

Based on valuations received from the El Paso County Assessor, revenue from property taxes is expected to be $5,060,000 in 2024. Real property is reassessed in odd numbered years in Colorado. The City’s mill levy of 10.239 has not changed for over twenty-five years, with the exception of a 6.1 voter approved mill levy beginning in 2023, that is restricted for certain Public Safety expenditures.

Increased valuations will result in an increase that is Tabor limited to 5.5% in the general fund and is estimated to be approximately 20% for the restricted Public Safety mill levy revenue. Property tax revenue may require a slight adjustment after final certifications are received from the El Paso County Assessor.

The City has a number of franchise agreements with various utility providers, including the City-owned water and electric utilities, which provide for payment for use of the City’s rights-of-way. The City owned electric utility will be the largest contributor to this revenue category with an estimated payment of $1,325,000 in 2024. Total revenue from franchise fees is projected to be $1,805,500 for 2024.

A small increase of $34,500 has been made to franchise fee revenue from the inital 2024 proposed projection.

Revenue derived from various types of licenses and permits is historically flat and expected to be $178,100 for 2024.

No revisions have been made to licenses and permits revenue.

This revenue source includes the Highway Users Tax Fund (HUTF), additional motor vehicle registration tax, an Intergovernmental Support Agreement (IGSA) with Fort Carson Army Base, cigarette tax, and grants. Intergovernmental revenue is projected to be $2,662,219 in 2024. The largest portion is the IGSA with Fort Carson , projected to be $1,392,908 and secondarily, the HUTF contribution, estimated to be $815,561 for 2024. HUTF is a state collected, locally shared revenue that is distributed monthly among state, county and municipal governments. HUTF revenues are derived from motor fuel taxes and various fees for vehicle registration, vehicle titles, licenses and taxes.

The revisions to the initial 2024 budget include a $23,992 increase in HUTF per CDOT and an IGSA revenue increase of $14,908.

This revenue source totaling $1,423,432 includes Impact, Development, Park and Recreation fees plus the School Resource Officer (SRO) agreement with School District 8 and other miscellaneous fees. Park impact fees are collected for the purpose of funding the impact of additional residents on the City’s park system. These fees are collected at the time of residential building permit application. These funds are dedicated to the acquisition and development of new parks and the enhancement of existing parks.

Revisions from the initial 2024 budget include: development fees are predicted to decrease $58,000 due to water availability concerns and the SRO program is adding a new officer at a fully burdened cost of $138,117.

Revenue from court and traffic fines is expected to be $486,300 in 2024.

A $5,000 revision has been made to court costs from the initial 2024 budget.

Interest income is anticipated to benefit from higher investment and savings account rates. Interest income is projected to grow by $400,000 to $475,000.

Miscellaneous revenue

Miscellaneous revenue is projected to be $360,299 in 2024.

Revisions to miscellaneous revenues are $18,224 for recreational rental fees and miscellaneous police revenue.

Transfers and Other Financing Sources

Included in these revenue sources totaling $1,593,605 are transfers from the Water Fund, Electric Fund, Ambulance Fund and the Transportation Fund for costs of IT equipment and services, transfers from the Water and Electric funds for facilities maintenance and repairs, and a proposed lease to purchase vehicles, equipment, and computer hardware.

Revisions have been made to transfers and other financing sources from the initial 2024 budget and include a $72,729 decrease in lease proceeds and a $116,265 decrease in transfers.