Grand Junction city officials reported a "structural deficit" in the city's budget, with expenses consistently outpacing revenues over the last five years. The findings, presented to City Council members on August 31, indicate that current spending levels appear unlikely to change course without policy adjustments, creating a significant challenge as the city prepares its 2027 budget.
Since 2021, the city's tax revenue has increased by approximately 30 percent, according to the presentation. However, municipal expenses have grown at a much faster rate, rising by 53 percent over the same period. This imbalance has resulted in what city officials term a "structural deficit." Grand Junction Chief Financial Officer Jay Valentine explained the severity of the situation at the August 31 City Council workshop meeting. Valentine stated that if the city maintained the "status quo," without adding new staff or one-time requests, it would still need to close a $6 million deficit. He further noted that this marks the city's "sixth straight year of declining margins," moving from an $11.3 million surplus in 2021 to deficits in the two prior years.
The preliminary 2027 financial projections, as presented in late August, forecast approximately $18 million more in expenses than revenues for the upcoming year. This figure accounts for the existing funding gap, anticipated new staff needs, and one-off purchase requests. This presents a predicament for Grand Junction, which is legally required to maintain a balanced budget.
City staff provided several explanations for the persistent trend of rising expenses. Workforce costs, including wages and benefits, are increasing, even as department heads report difficulties in hiring and retaining staff across various city departments. Additionally, municipal obligations expand each time Grand Junction adds new parks, streets, and other infrastructure, regardless of whether these expansions generate new revenue. The city's existing assets are also aging, leading to increasingly expensive maintenance and replacement costs. Unfunded mandates from higher levels of government also strain local funds. Furthermore, an influx of federal relief allocated in 2020 and 2021 has largely dried up, removing a temporary source of funding.
Other specific fiscal challenges contributing to the deficit include debt service payments that have stalled due to slower-than-expected development in the Dos Rios area. There is also a funding gap between rural fire district revenue and the actual costs of services provided. An ongoing effort to expand rosters at understaffed police and fire departments also adds to the city's financial commitments.
To help offset some of the immediate funding gap, Grand Junction maintains a notable sum of cash in reserve, with an ending fund balance projected to be about $48.5 million in 2025. City Manager Mike Bennett indicated that some of this reserve money would be used to address the funding gap in 2027. However, Bennett emphasized that these reserves would not cover the entire $18 million difference and could not sustainably offset budget gaps in future years. City Manager Mike Bennett stressed that while it "sounds very doom and gloom," the presentation aimed to illustrate how the deficit developed over time. He stressed the importance of being "very mindful of what we recommend" as the city moves into its 2027 budget process.
The city is currently in the process of finalizing its 2027 budget, a task all Colorado municipalities must complete before the end of the year. Municipal staff plan to present a more thorough budget proposal to elected officials in October, with workshop meetings scheduled for October 6 and October 19.
With the deadline now passed for placing any new taxes on the ballot, City Manager Bennett confirmed the city's commitment to implementing efficiency measures and spending cuts to balance the budget for 2027. He expressed hope that these comprehensive efforts to explore every alternative would make any potential future tax increase more acceptable to voters, should it become necessary in subsequent years. Bennett articulated this strategy, stating the city aimed to ensure "a lot of understanding of all the things we’ve done first" before potentially asking for voter trust and commitment for future tax increases. He added that the city has "made these efficiencies" and "sought out new opportunities."
