For questions not answered below, email FundingFix@littletongov.org. We will do our best to answer it promptly.
Why does Littleton have a revenue shortage and how bad is it?
This revenue shortage is due to several specific factors that add up to an annual estimated shortfall of $6.5 million in the city's Capital Projects Fund -which pays for maintenance, building improvements, technology and equipment that touches residents every day. Without intervention, this fund is projected to be depleted by 2025. Here's a summary of the city's ongoing revenue challenges:
Increasing Capital and Infrastructure Demands - Littleton's list of unfunded capital and infrastructure projects totals $98 million over the next 15 years. This is due in part to an underfunded street maintenance budget, deferred improvements to ailing public buildings (such as the courthouse, Town Hall Arts Center, Bemis Library, and the Littleton Museum), delayed purchases for fleet vehicles and police equipment, and the need to upgrade technology and connect fiber networks among critical facilities, to name a few. In total, the city's 2021 budget identifies over 70 capital and infrastructure projects that need funding. However, the Capital Projects Fund -which should pay for these projects -only brings in about $6 million each year, half of which is earmarked for street maintenance. And that $3.1 million for street maintenance only meets about 25 percent of all unfunded projects in 2021 alone.
Rising Maintenance and Repair Costs - When critical capital improvement projects are delayed, the materials, labor, and other associated costs keep going up. For example, the cost to regularly maintain one mile of any given city street is $100,000. If maintenance on that same mile is delayed by three to five years, the street needs to be completely rebuilt at a cost of $1 million.
Historically Low Taxes - Littleton's sales tax rate has not been raised in more than 50 years and is now 14% less than the metro-wide average. Additionally, the city gets only a very small percentage of the tax property owners pay. On a home valued at $500,000, the city receives $72 annually compared to $2,119 collected by Littleton Public Schools, $418 directed to Arapahoe County, and $299 to the South Suburban Parks and Recreation District.
Lack of Revenue Diversity - Most of Littleton's neighboring communities have a diverse mix of large-scale retail stores that generate an abundance of sales tax revenue for their cities' budget. However, because Littleton values its small, locally-owned businesses, it doesn't have the benefit of such a revenue base. Additionally, Littleton does not collect lodging or grocery taxes, or other types of fees, as other metro-area cities do.
Volatility of revenue - Two of the three main sources of revenue that directly feed the Capital Projects Fund are problematic.
Building Use Tax - Revenue from taxes that developers and homebuilders pay when new structures are approved is highly volatile, unpredictable, and averages only about $1.5 million per year. Because Littleton is land locked, substantial growth in Building Use Tax is unlikely.
- Highway Users Tax (gas tax) - Littleton's share of this revenue, which comes from federal and state sources, isn't enough to make up for the shortages in other sources of revenue. As more hybrid and electric vehicles hit the road, these funds will become less reliable.
During a February 2021 study session, city council discussed the revenue problems at length and directed staff to hire a consulting team to engage with Littleton citizens by collecting feedback through community-wide polling and conversations, through social media, and meetings. The data will be collected, analyzed, and presented to council to help inform their direction and next steps.
The engagement and research team is connecting with the Littleton community throughout the spring and summer. Check back here often for updates and ensure you’re connected with the team via email, Facebook, Twitter, and Nextdoor. The city is committed to reaching as many people as possible and will ensure a thorough and transparent process.
Unfortunately, Littleton's revenue problem will not be solved by a one-time stimulus payment of $10 million. The stimulus money will arrive in two payments of $5 million and must be spent over four years. It cannot be counted on to replace revenue; it acts more like a grant. The stimulus money, when viewed against the city's entire financial situation, is helpful but it is not a long-term solution as the city faces an annual revenue shortfall of $6.5 million.
While the city did experience an eight percent reduction in sales and use tax revenue in 2020, Littleton's systemic revenue problems are the result of a variety of factors unrelated to the economic downturn caused by the pandemic. Littleton's estimated lost revenue in 2020 because of COVID was $4.44 million.
Last year, city council asked each city department to make cuts to their budget - an effort that added up to $2.1 million in 2020. Additional cost-saving measures included:
• Cuts to learning and education
• Suspended raises for city employees (except police personnel)
• Suspended employee retirement plan matches
• Offered an early retirement program (17 employees accepted); only nine of those positions have since been filled
• Laid off four-and-a-half full-time employees
• Temporarily cut seasonal employees who maintain flowers and plantings in medians
• Bemis Public Library and the Littleton Museum operated at 80 percent of pre-COVID capacity in 2021
Only Littleton Police personnel - due to an agreement between the city and the police labor association - were given raises in 2020.
The $1.4 million council chamber renovation project - which was paid for with federal CARES Act funds -created ADA accessibility, doubled the seating capacity, upgraded the ventilation system, and improved technology for virtual meetings and social distancing. Some general fund revenues were spent on broadcast technology and other updates, but the vast majority of the renovation was paid for with federal funds through CARES Act funding.
Rescue which costs $7.1 million each year to operate. As part of the arrangement, the city agreed to dedicate $3.1 million annually to street maintenance. While the new revenue helps maintain Littleton's roads, it is not sufficient to cover all costs for deferred street repairs and decreasing congestion - an amount that's closer to $4.5 million annually.
City leaders and staff have studied the alternatives and found five ways to try to cover the shortfall:
• A retail marijuana tax increase would provide
$500,000 to $1 million per year
• A lodging tax - which Littleton does not currently collect - on hotel and short-term rental guests could generate up to $1 million per year
• A 0.5% increase in the sales tax rate ($0.50 on a$100 purchase) would generate an average of$6.5 million annually in new revenue
• A 0.75% increase in the sales tax rate ($0.75 on a$100 purchase) would generate an average of
$10 million annually in new revenue
• Eliminating community assets like Bemis Public Library and the Littleton Museum would create an annual savings of $4 million in the city's General Fund
The city's 2021 budget, which identifies these projects.