City budget focuses on inflation

Gunnison City Council held a public hearing on Tuesday to present details of the proposed 2026 budget and to solicit comments from the public. As proposed, total city expenditures next year will reach almost $64 million.

A first reading of the ordinance adopting the budget and setting the mill levy will take place on Nov. 18 in a regular meeting of the city council. A final budget must be approved no later than Dec. 15. 

City Manager Amanda Wilson clarified that the proposed budget assumed the passage of ballot initiatives 2B and 7A, which would raise property taxes to fund construction of a new fire station in Gunnison and fire department operations going forward. Should those initiatives not pass, staff identified adjustments that would need to be made to the final budget. In particular, the city will have to continue paying for fire services from the general fund.

According to Wilson, falling or flat revenue combined with persistently high inflation in some expense categories complicated the budget development process. That’s especially true in light of the need for large capital improvement projects such as the new wastewater treatment plant, she said. 

“The 2026 budget is largely focusing on adjusting for inflation, the cost of doing existing business, not on new capital improvements,” Wilson said in the meeting.

The budget contains no reduction in funding for existing services such as the Gunnison Senior Center or parks and recreation programming. However, funding for the city’s community grant program — money awarded to local nonprofits for services provided to the community —  is proposed to fall from $84,000 in 2025 to $67,200 next year. As of the application deadline on Oct. 15, a total of 18 applications for funding were received, totalling $176,000.

In addition, support for the Gunnison Country Chamber of Commerce and the Tourism and Prosperity Project’s ICELab will fall by 20%, if the proposed budget is adopted.

Rate increases for utility services are projected to be limited to roughly the rate of inflation and rise by an average of 6% for the typical user. These include increases for water (5%), wastewater (3%), electrical (10%) and refuse (5%). These numbers are only projections for budgeting purposes that could change next year with action from the council, City Finance Director Ben Cowan said.

Revenue challenges

City sales tax revenues flattened in 2022, and have not recovered significantly. The proposed 2026 budget “includes a conservative 0.5% increase in sales tax revenue,” city staff wrote in a memo to council. Out of a projected $10.5 million in sales tax revenue, nearly half a million is earmarked for debt service for the ice rink improvements, among other things.

“People think that the City of Gunnison is close to 100% funded by sales taxes or property taxes, and that’s simply not the case,” Cowan said. “Usually we’re around 23% on sales tax. This year, it’s budgeted at 13% and that’s because of that large miscellaneous revenues [should the fire station initiatives pass].”

Another expected drop in city revenue next year comes from a sharp decline in severance tax collected by the state on resource extraction activities and paid to local jurisdictions. In 2023, the city received just over $1 million — but projects that figure to fall to $20,000 in 2026.

“That’s a substantial hit to our source of revenue,” Wilson said.

Special tax collected on marijuana sales in the city is another source of revenue that is expected to continue falling — down 22% over 2022. This money is specifically earmarked to fund law enforcement, victim advocacy and community programs that aid in youth substance abuse prevention.

Not all the revenue-side news is bad. The city looks to retain just over $400,000 in “vendor service fees” traditionally paid to local business owners in exchange for help in collecting local sales tax receipts. Council is expected to approve doing away with this program in the coming weeks and move to let the state take over tax collection. 

In addition, in the wake of the dissolution of the Gunnison Valley Regional Housing Authority — and Gunnison County’s absorption of many of the services it provided — the 2026 budget allocates $50,000 instead of the $224,000 spent in 2025. This money will mostly be spent on compliance enforcement for deed restricted properties owned by the city. 

Capital investments

If adopted, the 2026 budget will spend $22.5 million on capital improvements, spread over a variety of projects, mostly in the public works arena. These include vehicle fleet replacements ($1.7 million), the East Gunnison Feeder project to extend electrical infrastructure to Gunnison Rising and the southeast portion of the city ($2.5 million), street improvements ($2.3 million) among others.

(Alan Wartes can be contacted at 970.641.1414.)