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The city of Manitou Springs is making cuts and shifting funds in its mid-year projected budget to offset marijuana sales tax losses, while a court case continues over its budget appropriation decisions.
The city is expecting to lose about $3.2 million from its “other” sales tax column this year, Finance Director Rebecca Davis said. The majority of the loss can be attributed to the city’s two dispensaries. The city halved its marijuana sales tax to come in line with Colorado Springs, which voted to allow recreational sales this spring.
Davis said the changes have prompted a “re-examination” of the budget from City Council and department heads.
“They were looking for reductions due to our new reality,” she said in a meeting with City Council last week.
Manitou Springs was the first municipality in El Paso County to allow recreational marijuana sales in 2014, leading to a significant jump in revenue for the mountain town west of Colorado Springs. With its metro neighbor adding recreational sales this spring thanks to a successful ballot measure, the Manitou Springs City Council decided earlier this month to drop the city’s marijuana-specific sales tax rate from 10% to 5%.
The city has long anticipated budget ramifications from Colorado Springs’ recreational marijuana decision, including in an all-day City Council executive session in early May.
“At this point we’ve spent quite a bit of time working on this,” said Mayor Pro Tem Natalie Johnson.
Davis said the city was able to reduce expenses by about $659,000 — a reduction she called “a good start.”
The amended budget shifts $400,000 from the city’s Mobility & Parking Enterprise fund to the general fund for street maintenance costs from the Public Services Department.
It also reduces the general fund transfers for capital improvements by rolling over unspent funds from previous projects. Davis said unspent money included $51,000 for a fire training tower completed several years ago.
“We’re pretty sure that’s not going to be needed,” she said.
The end result, Davis said, puts the city in cautiously good financial standing, with over $1 million more than previously anticipated in December 2024 for its unassigned general fund balance. The balance will spend down by about $1.2 million.
“It’s a good, healthy fund balance, but we do have to practice fiscal responsibility to make sure it is used in a good manner and not for things that aren’t totally necessary,” she said.
Manitou Springs is facing legal pressure over its unassigned general fund balance from the Manitou & Pikes Peak Railway Co., which is claiming in a lawsuit that the city breached contract in December by failing to appropriate $638,536 in reimbursement funds to the company that operates the cog railway.
The railway is owned by Denver-based Anschutz Corp., whose Clarity Media Group owns The Gazette.
The city had a previous agreement to reimburse the company excise tax revenue above $500,000 until 2067 in exchange for payments totaling $1.25 million while the railway was closed for reconstruction. Manitou Springs maintains the reimbursements do not need to be made in any particular year.
An El Paso County District Court judge denied a motion from the city to dismiss the case on June 18.
The Manitou Springs City Council will next review the budget at a public hearing expected to be set for Tuesday.
”}]] The city of Manitou Springs is making cuts and shifting funds in its mid-year projected budget to offset marijuana sales tax losses, while a court case continues over its budget Read More
