CHECKS AND UNBALANCES: Aurora budget likely facing cuts or new taxes

AURORA | Amid sluggish city sales-tax revenues, a repealed employee tax and lingering inflation, city budget officials are predicting an $11.5 million shortfall in the city’s 2026 estimated budget that must be addressed.

The deficit is the calculated shortfall between estimated revenues for 2026 and preliminary city budget expenditures.

“What we’re talking about is revenue changes outside our projection,” said Greg Hays, the budget director for the City of Aurora. “Expenditure changes outside our projection, the 2026 projection is based on assumptions and math, and those assumptions can and will change.”

City lawmakers were briefed on the current and future fiscal picture for Aurora at a Feb. 1 workshop and what they might do to address a bleak budget outlook. There are essentially two choices, city administrators said: cut city workers and services, or raise some kind of taxes or fees.

The 2025 adopted budget calls for $1.4 billion in appropriations for all funds, $125.2 million more than the 2024 Original Budget of $1.3 billion. Of this, $91.8 million comes from increased operating costs over the previous year and a $33.4 million increase in capital spending. Much of the 2025 increase is linked to city water department costs, up $36.6 million in the department’s operating budget and $21.8 million for capital improvements. 

The projected 2026 revenue deficit comes despite the 2024 general fund operating budget ending the year close to projections, Hays said.

The city’s budget is essentially divided into two types of expenditures: capital expenses, such as those linked to construction and materials, and operating costs, which consist primarily of city personnel.

Hays said current revenues dedicated to capital expenditures could be $5 million less than what was initially projected for the city to glean in 2025. 

“We’ve got a five-year capital plan. So if you miss revenues in year one, that means you’re probably missing revenues in years two through five,” Hays said.

In short, what looks worrisome for 2025 capital improvement revenues could get worse, he said.

The anticipated $11.5 million shortfall in the city’s general fund includes the recent loss of the Occupational Privilege Tax or the “head tax” revenue of $6.1 million and other revenue shortfalls of $5.4 million, coming from taxes and fees.

Aurora’s Occupational Privilege Tax, or “head tax,” was a $2-a-month tax levied on each employee and employer in Aurora. It was introduced in 1986 and was projected to generate $6.1 million in revenue this year. The tax was repealed by city council last year amid controversy and ended in January. 

To address the 2026 project shortfall, city staff pointed to a few top issues that could affect the city’s need to cut expenses or raise taxes. City lawmakers voted last July to transfer Aurora domestic violence cases from city courts to country courts, ending prosecution costs as well as costs for public defense. The change is estimated to save Aurora up to $3 million annually. But the change won’t start until July, and it’s unclear how much first-year savings will be during the transition, officials said. 

For decades, Aurora has handled their own misdemeanor domestic violence cases in their municipal court.

This decision to end local control of those cases created controversy within the city council and the community, with some lawmakers arguing that funding the service already came with county responsibilities, while others expressed concerns about delayed court dates and cases would be mishandled by a county legal system already overwhelmed.

The cost of governing going up

Although Aurora’s sales tax revenue has increased over the last three years, city operating costs have also increased. While those tax receipts, approaching $300 million annually, have risen, they’re $2.1 million, under what the city initially projected for this year. 

Aurora Sales tax revenues each year, according to city budget records, were:

2021: $245,602,264

2022: $268,778,704

2023: $282,127,085

2024: $292,675,825

Among the possibilities of creating a 2026 balanced budget, mandated by the city charter, are cuts in the city workforce, especially in unfilled positions. The city has about 3,500 full-time, part-time and seasonal employees.

City officials said that while just keeping vacant positions open may be attractive, it comes with consequences.

The problem for Aurora is two-fold. Over the last several years, the number of city workers compared to the city’s population has waned, stretching services thinner, Hays said. Also, there are a number of unfilled city employee vacancies that are integral to city departments and services.

But stressing the current level of services is a real problem, city officials say. As the population has grown in Aurora over the last 20 years, the number of employees hasn’t kept pace.

“We’re down about 17% over the 20 years,” Hays said. “The population keeps going up. We’ve sort of flattened from a non-public safety perspective,” referring to employees outside of the police and fire departments.

Cutting $11 million from the 2026 budget will inevitably impact services, as employee costs make up 64% of the general fund, Hays said. Even if all the vacant, non-public safety positions were eliminated — creating a savings of about $8 million —  it would not be enough to cover the shortfall.

“And that’s assuming that all those (positions) are unnecessary, which is not the case,” Hays said.

More money as an alternative to less spending

The city is also considering potential revenue increases. Options include increasing sales or property taxes or eliminating tax exemptions for items like food for home consumption and prescription drugs, which could generate more than $50 million a year. 

“De-Brucing” city property taxes have also been mentioned and could add around $17 million in 2025, according to Hays.

The term refers to voters creating an exception to the state’s Taxpayer Bill of Rights constitutional amendment. The so-called TABOR measure requires voters to approve all tax increases. In addition, the law caps government revenues based on what was collected in previous years. The measure was promoted by Douglas Bruce, a Colorado Springs tax-protester, hence the reference to “Bruce.”

Aurora voters agreed to “De-Bruce” sales and use tax revenues in the early 2000s, according to Hays. It essentially lifted a cap on how much sales and use tax can be collected each year. Aurora is currently not “De-Bruced” for property tax.

It would require voter approval, and selling it to voters would be difficult. Aurora, like almost all metro homeowners, has seen substantial property tax hikes already in the past two years as property values have skyrocketed.

Other budget cuts on the table

One of the last places mentioned as a possible cut was removing $2.5 million for staffing and other operating costs for a new fire station in 2026. Hays clarified that he and staff were not suggesting it as a cut but were mentioning all the places the city could cut. The costs to build a permanent or temporary new fire station will come out of the Capital Projects Fund, according to Ryan Luby, communications deputy director.

Expansive housing growth on the eastern side of the city, especially northeast in Aurora Highlands, hasn’t come with new fire-stations, critical for public safety response times and linked to homeowner insurance rates.

Fire Chief Alec Oughton said the Aurora Fire Department is seeking federal grants to help fund staffing for the two new fire stations. Officials are applying for Staffing for Adequate Fire and Emergency Response (SAFER) grants, which could provide up to $5 million per year for three years to help cover payroll expenses. 

The timing may be inopportune as the Trump administration has made a concerted effort to stall or cut billions in federal grants like these. 

This funding would give the city time to identify long-term revenue sources to sustain the fire stations while navigating the ballot and funding processes.

No members of the city council backed cutting the fire station. Councilmember Françoise Bergan said her constituents, who live in the area that would be served by a new fire station, say they are even more concerned after the devastating wildfires in California.

The needed fire station re-sparked the ongoing city council skirmish over repealing Aurora’s employee “head tax.”

City lawmakers have argued and reversed itself on ending the $2 per employee tax for almost two years. In November, lawmakers filled the dais, and personal texts, with threats and political drama, as council members argued whether to follow through with plans to repeal the tax Dec. 31, 2024. The fireworks began when Bergan sponsored a postponement in the repeal, saying that expansive growth in the city’s northeast and southeast areas warrants new fire stations as a matter of public safety, and Aurora needed the head-tax money to pay for it.

After intense squabbling, Bergan’s proposed change failed, and the tax was ended in December, leaving multiple council members frustrated with finding a new way to fund the fire stations. Only one of the fire stations’ staffing is budgeted for 2026. The city plans to pay for construction of the new fire station from within the city’s capital improvement fund, according to Luby.

Councilmember Danielle Jurinsky told fellow lawmakers she is exploring a possible ballot measure to raise Aurora’s lodging tax by 1% or 2%. 

Sales taxes, lodger taxes and similar levies on specific industries or services are traditionally strongly opposed by the tax targets. Councilmembers Steve Sundberg and Jurinsky said Aurora has one of the lower lodging taxes in the state compared to most other cities. They did not detail where Aurora falls in the list, and against which cities. 

“As of 2024, we have 6,471 available rooms subject to the lodger’s tax,” Randi Morritt, CEO of Visit Aurora, said in an email. “This is not the total number of available rooms in the market but rather the reliable supply of overnight rooms. Several exemptions from lodger’s tax factor into this number.”

Aurora lodging tax revenue from the last three years:

2022: $8,317,787

2023: $9,139,825

2024: $8,543,112

Jurinsky said she plans to negotiate with Ryman Property Group, the current owner of the Gaylord Rockies Resort, to “voluntarily” contribute an amount matching any approved tax increase. If voters pass a 1% to 1.5% increase, she said she hopes the Gaylord will provide the equivalent revenue to the city. 

Gaylord officials did not return requests for comment as to whether they would volunteer to pay money to Aurora on their receipts at the 1,500-room conference center. Rooms at the Gaylord go for anywhere from about $300-$700 a night, according to the hotel’s website. Collecting an average room rate of $500 with 50% vacancy for the year would cost Gaylord owners upwards of $3 million a year — netting Aurora about the same — if it volunteered to “match” a 2% hike in lodger’s tax.

Ryman’s 2023 annual report stated that, companywide, Gaylord resorts saw an occupancy rate of about 65%, and the company showed near-record revenues and profits on about $2.2 billion in revenue for that year.

Financing of the Gaylord hotel has been a sore subject with many local and statewide elected and business leaders. In 2015, the hotel was given $300 million in Aurora tax credits and $200 million in state and other grants to build the $800 million conference center. Aurora still grants the tax exemptions for the hotel, which was touted as being able to prompt a tourism boom in Aurora.

Last weekend, some Aurora lawmakers bristled at the complicated and difficult job of asking voters to sanction new taxes targeting themselves or city businesses when lawmakers just ended one, the employee head tax. 

“To be clear, we had a tax in place that the majority of this council voted to get rid of, and now the idea is to replace it with literally another tax, and we have to go to the voters for it, to do exactly the same thing we could have accomplished three months ago,” Councilmember Curtis Gardner said.

Not just operation expenses, Aurora is eyeing $700 million in citywide improvements

The City of Aurora has $700 million in essential city capital improvement needs identified by a grassroots effort. This includes roads, parks, buildings and more. Although they haven’t identified precisely how they plan to fund the infrastructure needs, it would most likely require some kind of voter-approved tax hikes. 

“We have a lot of needs,” Councilmember Curtis Gardner said in January when the city rolled out plans to solicit comments — and ultimately support — for a massive building program. “I think our staff has done a good job of winnowing that down to the most critical needs, which that number alone is nearly a billion dollars.”

An initial list of road, parks, public safety and cultural projects was identified by staff and City Council based on a number of factors, including, in part, significant need, the condition of the asset and readiness for construction,”city spokesperson Julie Patterson said in a statement.

Tier one projects include $24 million for a traffic management center, $18 million for Americans with Disabilities Act sidewalk compliance, $21 million for Fire Station 8 replacement and $54 million for a new police evidence storage warehouse.

Tier two projects include $35 million for bridge widening of Alameda Avenue over I-225 and $42 million for Utah Pool/Recreation Center improvements.

Tier three projects include $50 million for a new park on Alameda Avenue and Airport Road, $47 million for the City of Aurora Public Safety Training Center expansion and $17 million for a pickleball court in Ward V.

“We’re looking for monies through grants and everything to supplement, but that’s never enough.” Councilmember Bergan said. “We’ve talked about this the whole time I’ve been on council, about going out for a ballot initiative, and then we’ve never made it happen because it takes a lot of education to get to that point.”

Details about the city’s strategy surrounding public input have not yet been released.