Brandon Leuallen, The Business Times

Grand Junction is restructuring how it funds city services, reducing General Fund subsidies, reallocating expenses and consolidating operations as City Manager Mike Bennett and the Grand Junction City Council work to address a structural budget deficit that has developed over several years.

The changes are part of a multiyear effort that began with the 2026 budget and continues in Bennett’s recommended $317.4 million budget for 2027. The proposal reflects a shift toward controlling recurring expenses, making greater use of dedicated funding sources and prioritizing essential services under the City Council’s strategic plan.

The city entered the budget process in 2026 facing a $6 million structural deficit, meaning the cost of maintaining existing services would exceed projected recurring revenue by that amount without adjustments.

“We have to live within our means, and we have to adjust our expenses to our revenues,” Bennett told council members during an Oct. 5 budget workshop.

Since 2021, city revenues have increased approximately 30 percent, while expenses have grown 53 percent. 

Rising labor and health-insurance costs, expanding public-safety demands and financial commitments associated with previous investments have contributed to the imbalance.

Previous city leadership pursued substantial investments in infrastructure, facilities and development intended to stimulate future growth, and some investments have produced results, while others have generated less revenue than expected, leaving the city and its taxpayers with substantial debt payments that continue to pull from the general fund. 

The current approach places greater emphasis on aligning recurring expenses with recurring revenues rather than relying on speculative future growth or reserves to sustain existing commitments.

Reallocating expenses to appropriate funds

One significant change involves shifting approximately $2.1 million in labor expenses from the general fund to the city’s capital fund.

According to Bennett previously, some employee time spent managing or completing certain capital projects was paid through the general fund rather than included in the projects’ costs.

Under the proposed approach, those expenses would be assigned to the capital projects they support, providing a more complete accounting of project costs while reducing the burden on the general fund.

Bennett said the change reflects a financial management best practice the city intends to continue.

“But that relieved the general fund of 2.1 million. But it also constrains or adds cost to the capital fund 2.1 million,” Bennett said.

The reallocation improves the general fund’s position without reducing overall city expenditures.

The city is also proposing to stop using general-fund money to reimburse its water and sewer utilities for connection fees waived on qualifying affordable-housing developments.

Council previously approved eliminating general-fund reimbursements for other categories of affordable-housing impact fees. The new recommendation would extend that approach to water and sewer connection fees.

The utilities would absorb the lost connection-fee revenue, although qualifying developments would generate ongoing monthly utility revenue.

The meeting cited a recently approved 48-unit Rural Homes development in the Salt Flats project with approximately $593,340 in water and sewer connection fees, illustrating the financial significance of the proposed policy.

Downtown and tourism funding reductions

Two prominent areas facing reductions in general-fund support are the Downtown Development Authority and Visit Grand Junction.

The recommended budget includes a $500,000 reduction in an annual city contribution to the DDA, which also receives funding through sales and property tax increment financing.

Grand Junction Chief Financial Officer Jay Valentine said the reduction would come from an annual contribution associated with debt payments for the Las Colonias development and Two Rivers Convention Center improvements rather than reducing the DDA’s existing tax increment financing arrangements.

Valentine said city officials had discussed the proposed funding reduction with Downtown Development Authority Director Brandon Stam and reviewed the organization’s long-term financial projections.

“We’ve gone through his long-term financial plan, and they’re still very sound with the revenues that they have,” Valentine said.

Visit Grand Junction is also preparing for the elimination of approximately $864,000 in annual general-fund support associated with the city’s former vendor-fee arrangement.

The reduction is being phased into the tourism organization’s operations, with its full effect expected by 2028.

Bennett emphasized that lodging-tax revenue dedicated to tourism marketing will remain available to Visit Grand Junction. The reduction affects the additional general-fund contribution, not the voter-approved lodging-tax revenue.

Visit Grand Junction Director Elizabeth Fogarty acknowledged that reducing marketing expenditures could affect visitation and tax revenue, but she said the organization is adjusting its strategy to minimize those effects.

“We can’t completely overcome a reduction that will inevitably happen, but it’s important that we offer this,” Fogarty said.

Bennett said Grand Junction has attracted interest from hotel developers although construction costs and financing conditions have slowed investment decisions.

He said Grand Junction is approaching the practical limits of its existing hotel capacity, with occupancy rates nearing 80 percent during some periods. He noted the remaining rooms are not necessarily the types that typically attract visitors, limiting the effectiveness of additional tourism marketing without new hotel development.

The organization is placing greater emphasis on attracting additional hotel development, which would expand lodging-tax collections and provide a more sustainable source of future funding.

Consolidating services and evaluating properties

The recommended budget also includes operational changes intended to reduce staffing and facility expenses while making greater use of existing city assets.

One proposal would move activities currently offered at the city-owned senior center into the new Community Recreation Center, where officials say additional programming and meeting spaces would be available.

Bennett said the consolidation would allow the city to better utilize the recreation center rather than continuing to operate overlapping facilities.

Selling surplus city properties was another possibility raised during the workshop, although officials noted the city charter requires voter approval for certain property sales.

Council member Anna Stout suggested evaluating potential property sales could demonstrate fiscal responsibility to voters before the city considers asking for additional revenue.

The city is proposing to close City Hall to walk-in traffic on Fridays while continuing phone, online and appointment-based services. Bennett said maintaining existing counter hours could otherwise require an estimated $500,000 to $800,000 in additional staffing expenses.

The budget proposes eliminating 13 positions, including 10 vacant positions and three filled positions, although officials said some affected employees have opportunities to transfer to other city jobs.

Bennett said the reductions were selected strategically rather than applying identical percentage cuts across departments.

Rising costs and remaining challenges

Despite the reductions, personnel and benefit expenses continue increasing.

The recommended budget includes $3.1 million across city funds for compensation adjustments following a classification and compensation study.

The city is also proposing changes to its self-insured employee health plan, including adjustments to copays and out-of-pocket limits, expected to save between $2 million and $4 million annually.

Public safety remains a major financial challenge. The recommended budget includes six additional police officers and three fire battalion chiefs, while the city continues exploring a regional fire protection district as a potential long-term solution.

For 2027, the city plans to use $2.3 million from general-fund reserves and another $2.3 million from the First Responder Fund balance to bridge remaining public safety funding gaps.

Bennett cautioned that those reserves provide temporary relief rather than eliminating the underlying imbalance.

Without a longer-term solution, he estimated the remaining structural gap could exceed $5 million in 2028 as recurring costs continue increasing.

The city plans to continue examining capital projects, enterprise-fund expenses and potential utility-rate increases at its Oct. 26 budget workshop before beginning formal consideration of the 2027 budget in November.

“We have to live within our means. We have to set ourselves up for financial sustainability,” Bennett said. “If we don’t do that, we have more difficult decisions to make than the ones that are still difficult now.”