Annual Comprehensive Financial Report & Popular Annual Financial Report

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Both the City of Boulder Charter and State law require that an audit of city financial records be conducted each year by an independent certified public accountant. Such an audit has been performed and this report is being published as part of the requirement for the fiscal year ended December 31, 2023.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls that has been established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free from any material misstatements.

CliftonLarsonAllen LLP, has issued unmodified (“clean”) opinions on the City of Boulder’s financial statements for the year ended December 31, 2023. The independent auditors’ report is located at the front of the financial section of this report.

Management’s Discussion and Analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter and should be read in conjunction with it.

Profile of the Government

The City of Boulder is located in north central Colorado, approximately 25 miles northwest of Denver via the Denver-Boulder Turnpike (U.S. 36). The city is located at the base of the foothills of the Front Range of the Rocky Mountains at an altitude of 5,354 feet. Nestled at the foot of the Rockies, Boulder has a special beauty that is complemented by its diverse culture. Boulder has a diverse economy that is supported by computer, aerospace, scientific and research firms, the University of Colorado, and several federal laboratories.

Superior educational and cultural resources make Boulder a fulfilling place to live, work, and play. The city encompasses approximately 25.8 square miles and is the county seat of Boulder County. The population of the city is 108,250.

The City of Boulder is a municipal corporation duly organized and existing under the laws of the State of Colorado. In particular, the city is a home rule city and adopted a charter pursuant to Article XX of the Constitution of the State of Colorado by vote of the electorate on October 30, 1917.

The council/manager form of government was adopted in the city's charter and has been in operation since January 1918. The City Council, an elected body of nine members, is the policy-making arm of the government. Eight of the members of the City Council are elected for staggered four-year terms and one is elected for a two-year term, with five council members elected in November of each odd-numbered year. A City Manager, appointed by the City Council, serves as the city's chief administrative officer.

The city provides a full range of services. These services include police and fire protection; cultural and recreational facilities and events; open space and mountain parks acquisition and maintenance; environmental services; housing and human services; construction and maintenance of highways, streets and infrastructure; water, wastewater, and storm water/flood control utilities; and parking facilities and services.

Certain parking facilities and transportation management services are provided through legally separate entities, Downtown Commercial District, University Hill Commercial District, Boulder Junction Authority General Improvement District-Transportation Demand Management, and the Boulder Junction Improvement District. In addition, acquisition and construction of certain city properties and facilities is provided by Boulder Municipal Property Authority. These separate entities function, in essence, as separate departments of the City of Boulder, are governed by the City Council acting as the Board of Directors and have therefore been included as blended components of the City of Boulder’s financial statements.

Budgetary Process

The City Charter includes provisions for proper budgeting, fiscal control, and auditing. It requires the establishment and maintenance of a budgetary control system for general operations. The objective of budgetary control is to ensure compliance with legal provisions embodied in the annual appropriated budget, approved by the City Council, which serves as the foundation of the city’s financial planning and control. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level. The city budgets revenues and expenditures/expenses for all funds except the two Old Hire Pension Trust Fiduciary Funds.

The city has implemented an annual budget process and adopts the coming year’s budget by December 1, as provided by City Charter. The City of Boulder Charter established the time limits pertaining to the adoption of the budget. The budget process and schedule of development is designed to fit within the Charter mandate and to allow for active and early participation by the City Council, with an emphasis on public input. The city’s budget is developed throughout the year, but the bulk of the effort occurs during a nine-month period beginning in February and ending in October. The budget and annual Appropriation Ordinances for the ensuing term are generally adopted in October during public hearings.

Any budget revisions affecting fund totals are adopted in a supplemental appropriation ordinance approved by the City Council. The City Council may make additional appropriations or budgetary transfers during the fiscal year for unanticipated revenues received by the city. City management, with the approval of the Central Budget Office, may also transfer budgeted amounts within a fund without City Council approval. All appropriations lapse at year end.

Detailed budget to actual comparisons are provided in this report for the General Fund and all annually budgeted special revenue and capital project funds.

Factors Affecting Financial Condition

Actual sales and use tax revenues for the City increased by 2.42% from 2022. During 2023, Retail Sales Tax was up 1.62%, Business/Consumer Use Tax was down 14.98%, Construction Use Tax was up 28.13%, and Motor Vehicle Use Tax was up 6.18%. Accommodations Tax increased 4.29% over 2022 and Short-Term Rental Tax increased 43.20% over 2022.

Sales and use tax revenues in 2023 made up approximately 47% of the General Fund, 92% of the Open Space and Mountain Parks Fund and 73% of the Transportation Fund total revenues. The property tax base for 2023 was appraised at the 2020 actual value. The assessed valuation for property within the City of Boulder decreased from $4.282 billion in 2021 to $4.227 billion in 2022, or 1.3%. Taxes levied against the 2022 assessed valuation will be collected in 2023. Since 2012, with voter approval the City is not subject to the Taxpayer Bill of Rights (TABOR) spending limitations except for the UHGID and CAGID Funds.

Projections for the Future

According to “Economic and Revenue Forecast”, released March 15, 2024, the U.S. economy is emerging from a tense period, when runaway inflation demanded an aggressive monetary policy response that risked the longevity of the post-COVID recovery and expansion. Over the past six months, the economy has emerged from this tense period onto firmer ground. Inflation is waning at the national and state levels, and employers continue to add jobs at a healthy rate. Households continue to spend, buoying businesses even in the face of high interest rates. Taken together, current indicators suggest that the U.S. economy is maintaining an average pace of expansion, far surpassing many economists’ expectation for a recession or a very sluggish pace of growth.

This forecast expects continued moderate expansion in the U.S. and Colorado economies at a slightly slower pace in 2024 than in 2023. Receding inflation, alongside interest rate reductions anticipated to begin this summer, will boost growth, while deteriorating household balance sheets will raise headwinds. Colorado’s economy is expected to modestly outperform the nation’s, with comparable employment growth in 2024, higher income growth, and lower inflation.

The change in March 2024 year-to-date sales and use tax revenue, compared to March 2023 year-to-date is as follows:

The following information analyzes the results of the above sales and use tax chart:

• Sales Tax – Actual retail sales tax revenue increased 1.62% through March 31, 2024, compared to March 31, 2023. Much of the growth in sales tax is attributable to the adoption of the Marketplace Facilitator ordinance in fiscal year 2020 as well as price inflation in consumer goods.
• Business/Consumer Use Tax – Revenues decreased 0.80% from March 31, 2024, compared to March 31, 2023. This category can be volatile as it is associated primarily with the amount and timing of capital asset purchases by businesses in the city and the amount and timing of audit revenue.
• Construction Use Tax – This category increased 17.15% from March 31, 2024, compared to March 31, 2023. This is another volatile tax category as it depends upon the number and timing of construction projects in any given period. Revenue in this category assumes “base” number of projects will continue indefinitely. Revenue from large projects above the base is considered one-time revenue used for one-time expenses.
• Motor Vehicle Use Tax increased by 10.00% year to date 2024. Vehicles purchased by Boulder residents are subject to a 3.86% use tax. If sales tax is not paid at the time of purchasing a vehicle, a Motor Vehicle Use Tax is due at the time a vehicle is registered or titled to an address within the city.
• Recreational Marijuana Tax - Revenues decreased by 17.34% from March 31, 2024, compared to March 31, 2023. This decrease is consistent with statewide trends.

The most current City revenue report can be found at the Revenue Reports webpage.

YTD December 2023 sales tax revenue (including audit revenue and the additional 3.5% recreational marijuana tax) increased by $3,274,315 (or 2.40%) when compared to YTD December 2022. This increase results in a compound annual growth rate of 5.5% compared to 2019. Much of this growth in sales tax is attributable to the adoption of the Marketplace Facilitator ordinance in 2020, which resulted in over $3.5 million of new revenue in 2021, $3.8 million in 2022 and $5.1 million in 2023.

In the coming year the city will continue to emphasize priorities that are critical to Boulder, including new investments in climate and wildfire resilience work, behavioral health, including a non-law enforcement response pilot program, initial operations for a day services center for the unhoused, affordable housing initiatives, and continues programs to effectively manage safe and welcoming public spaces. The city will continue to invest in city staff to ensure delivery of community services and invest in well-maintained city infrastructure.

Below is a table with actual percentage changes in sales and use tax for 2022 and 2023, along with the 2024 sales tax projections for the City of Boulder as well as actuals and projections for consumer prices, unemployment rate and personal income from the Colorado Office of State Planning and Budgeting:

The Importance of Sound Strategic Planning

The following narrative was extracted from the 2023 Annual Budget:

The City of Boulder developed a Sustainability, Equity, & Resilience Framework and a Boulder Valley Comprehensive Plan that aligns with this framework. Through the adoption of a Sustainability, Equity, & Resilience (SER) Framework, the city has identified several outcomes necessary for Boulder’s vision of a great community.

The City is in the second year of a three-year plan to implement an enhanced approach to outcome-based budgeting, called Budgeting for Resilience and Equity, to incorporate better performance metrics and identify outcomes, advance cross-department and -program collaboration, and increase the transparency of the development of the annual budget and our investments as they align with community goals.

During the 2023 budget development cycle, city departments, in partnership with the Central Budget Office, performed a citywide program and project inventory and aligned identified programs to the SER Framework. In conjunction with these efforts, the City implemented a new budgeting and transparency tool, OpenGov, to enhance the identification and articulation around the City’s intended outcomes and to better understand how the City’s existing and future investments align with these goals. These enhancements provided ease for cross-departmental collaboration and an improved decision-making process during budget proposal review. In 2023, the City identified outcomes associated with department programs and aligned these outcomes to the SER Framework. In 2024, the City will identify measurements and key performance indicators (KPIs) for program areas and ultimately use this data to guide budget decisions.

In addition, the Boulder Valley Comprehensive Plan, Department Master Plans and Strategic Plans, and Subcommunity or Area Plans are developed to align with and support the achievement of the outcomes of the SER Framework. Together, they inform development standards, financial policies, and resource allocation through the annual budget process. Recent adopted or approved master plans include Facilities, Parks & Recreation, Library, Transportation, Open Space & Mountain Parks, and Fire-Rescue. Management is committed to incorporating future financial impacts of adopted goals and strategies during the planning process to ensure plans align with available and future resources.

During 2023, the city continued to implement the financial policy of using one-time revenue only for one-time expenditures, which has served the city well during economic downturns.

Major Initiatives

The 2024 Capital Improvements Program (CIP) includes proposed funding of $141.2 million. The entire six-year (2024-29) CIP includes proposed funding of $903.7 million for discrete projects as well as categories of funding for ongoing needs (e.g., local drainage improvements, major trail maintenance). The city is spending the majority, over 73% of the 2024 - 2029 capital funds on capital enhancement and maintenance of its existing assets, once again demonstrating the city’s continued focus and investment into taking care of its existing physical assets in the community. CIP funding varies year to year depending on the type and cost of projects recommended for funding in that year and the amount of external funding received.

Highlights of the six-year plan include Utilities plans to spend $55.0 million on infrastructure projects in 2024, including investments in the Betasso Water Treatment Plant Improvements, Barker Water System, and Main Sewer Interceptor Project. Total planned Utilities spending for 2024 – 2029 is $380.8 million. Transportation and Mobility plans to invest $25.7 million in 2024 to support projects such as the 30th St Corridor Multimodal Improvements Project and Baseline Road Phase 2 Improvements. Planned spending for 2024 – 2029 for transportation and mobility is $117.3 million. Facilities and Fleet plans to invest $29.7 million in 2024 to support facilities and fleet maintenance projects. Total planned Facilities and Fleet spending for 2024 – 2029 is $264.6 million.

On Nov. 2, 2021, City of Boulder voters overwhelmingly approved a 15-year extension of the Community, Culture, Resilience and Safety Tax (CCRS). The extension is expected to generate about $11.5 million annually to finance projects that support community safety and well-being and provide funding to several community nonprofits. More information on these projects can be found at the Community Culture Resilience and Safety Tax webpage. Visit the City of Boulder capital improvement program website.

Other Financial Information

Debt Ratings

During 2023, the city’s general obligation credit ratings were reaffirmed as Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s. The primary reasons cited for these high rating levels were the general strength of the Boulder economy, its distinctiveness from the general Denver metropolitan economy, and the lesser reliance of the city’s General Fund on sales taxes when compared with other Colorado municipalities.

Certificate of Achievement

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the city for its Annual Comprehensive Financial Report for the fiscal year ended December 31, 2022. This was the 34th consecutive year that the city has achieved this prestigious award and the forty-first year in total. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

In addition, the city also received the GFOA’s Distinguished Budget Presentation Award for its 2023 budget document. In order to qualify for the Distinguished Budget Presentation Award, the government’s budget document had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device.

Another important accomplishment for the City of Boulder is the Award for Outstanding Achievement for producing a Popular Annual Financial Report for the fiscal year ended December 31, 2022. This is again only valid for a period of one year and is awarded by the GFOA. This report is a useful tool for residents to obtain a greater understanding of the role of the city’s government. The intent is to provide a report that is informative and easy to understand. We are proud of this continuing commitment to provide complete and reliable information to the residents of the City of Boulder.

Acknowledgements

The preparation of this report could not be accomplished without the efficient and dedicated services of the entire Finance Department staff. We would like to express our appreciation to all members of the department who assisted and contributed in its preparation. We also thank the Mayor, City Council Members, City Council Audit Committee Members, and the City Manager for their interest and support in planning and conducting the financial operations of the city in a responsible and progressive manner.

Government-wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of the city’s financial position. Our analysis below focuses on the net position and changes in net position of the city’s governmental and business-type activities.

Table 1 - Net Position (dollars in thousands)

Table 1 presents an analysis of the city’s net position as of December 31, 2023. The city’s assets and deferred outflows of resources exceeded its liabilities and deferred inflows of resources by $1,680.7 million at the close of the current fiscal year. By far the largest portion of the city’s net position (74%) reflects its investment of $1,250.6 million in capital assets (for example, land, buildings, transportation infrastructure, machinery and equipment, utility plant in service and underground drainage facilities), less any related debt used to acquire those assets that is still outstanding. The city uses these capital assets to provide services to the public; consequently, these assets are not available for future spending. Although the city’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the city’s net position, $137.4 million (8%), represents resources that are subject to restrictions as to how they may be used. The remaining balance of unrestricted net position, $292.7 million (18%), may be used to meet the city’s on-going obligations to the public and creditors.

Net investment in capital assets increased $59.7 million, or 5%, compared to 2022. This increase is due to capital project costs related to construction of Fire Station #3, western city campus redevelopment, Flatirons Golf Course enhancements, and other large utility construction projects. Restricted net position increased $8.1 million, or 6%, compared to 2022 mainly due to an increase in restricted fund balance related to capital projects, development, and legally restricted special revenue funds. The $39.6 million, or 16%, increase in unrestricted net position during 2023 was due to many factors. These included an increase in business type unrestricted net position which is consistent year over year.

It is important to note that approximately $63.7 million in governmental unrestricted net position arises from the net position of the city’s internal service funds, discussed above in “Overview of the Financial Statements – Proprietary Funds.” Although it is highly unlikely that these funds will be liquidated, in the event that they are, the distribution of the net position of these funds would result in a portion of these unrestricted net positions being liquidated to unrestricted net position of governmental activities and unrestricted net position of business-type activities.

Analysis of Changes in Net Position

As can be seen from Table 2, the city’s net position increased by $107.4 million during 2023. This increase is explained in the governmental and business-type activities discussion below.

Governmental Activities

Net position of governmental activities increased by $71.2 million during 2023, accounting for 66% of the total increase in the city’s net position. This increase was $28.0 million less than the $99.0 million increase in net position in 2022.

Revenues during 2023 increased by $24.0 million compared to 2022. Sales and use taxes increased $6.9 million during 2023. Property taxes decreased by $2.3 million due to the library mill levy going to the newly formed Library District and a slight decrease in the property tax assessment. Miscellaneous revenues decreased $2.0 million in part due to the receipt of a refund from the Stadium District due to the sale of the Broncos franchise in 2022. Other taxes increased $2.9 million due to increased consumer spending. Interest and investment earnings increased $22.5 million compared to 2022, primarily due to increased yields on portfolio investments and the accounting treatment on unrealized gains and losses. A decrease of $1.0 million related to the sale of capital assets was due to less sales of capital assets in 2023 compared to 2022.

Expenses increased $52.8 million in 2023 compared to 2022. Public Works expenses increased $12.7 million and General Government expenses increased $12.4 million while Public Safety expenses decreased $6.4 million. Public Works had an increase in expenses related to increased spending related to major capital projects. General Government saw a significant increase in expenses related to increased American Rescue Plan Act spending and movement of expenses from Culture and Recreation and Administrative Services to General Government. Public Safety saw a reduction in expenses due to an increase in capital expenses capitalized in 2023.

Table 2 - Changes in Net Position (dollars in thousands)

• 2023 Annual Comprehensive Financial Report (ACFR) PDF

About the Popular Annual Financial Report

As a part of an ongoing commitment to transparency and helping ensure community access to information about its local government the City of Boulder provides this Popular Annual Financial Report (PAFR), which describes the city's financial activities and position in 2023. This is a summary of information reported in the city's 2023 Annual Comprehensive Financial Report (ACFR).

While the ACFR is prepared in accordance with generally accepted accounting principles, the PAFR is not. The ACFR is a more detailed, audited document of record, and it presents information in a format consistent with this standard to ensure it includes detailed information including the city's component units, presents individual funds in detail, and fully discloses all material events, both financial and nonfinancial. By contrast, the purpose of the PAFR is to increase public awareness about the city's financial condition by presenting information in a more user-friendly format and is unaudited and not presented in accordance with general accepted accounting principles.

The city's website also includes a wealth of information about the activities of city departments; job opportunities; budgets; council members, agendas and meetings; community events; and much more.

Quick Facts about Boulder

• Population: 108,000
• Unemployment rate: 3.3%
• Sales and use tax rate: 3.86%
• City employees: 1,546
• City operating budget: $355 million
• City capital budget: $161 million

• 2023 Popular Annual Financial Report (PAFR) PDF