City budget and finance staff told Thornton council that, under current assumptions, general-fund expenditures will exceed projected revenues starting in 2027 unless the council changes policy levers, adjusts assumptions or pursues new revenues.

Erica Senna, the city’s budget director, presented a multi-year financial model showing an available-fund-balance curve and an “inflection point” where annual expenditures (the orange line in staff graphics) overtake projected revenues (the blue line). Senna said personnel costs dominate the general fund, and described the principal variables that drive the city’s outlook: wage and benefit growth, the number of new full-time equivalent positions (FTEs), inflation and assumed levels of capital maintenance and service expansion.

“Seventy‑eight percent of costs in the general fund relate to personnel,” Senna said during the presentation to council. She and finance director Kim Newhart showed how modest changes to wage-growth assumptions, FTE growth or how the city maintains infrastructure would materially change the multi-year projection.

Staff presented three types of policy levers to affect the forecast:

- Expenditure levers: reduce assumed yearly wage or benefit growth; slow or modify assumed FTE additions; alter assumed service levels or capital‑maintenance pacing.
- Revenue levers: pursue ballot measures (sales or property tax increases); target land‑use changes and commercial development that produce higher recurring sales taxes; adjust fees and charges or adopt more aggressive sales‑tax growth assumptions in projections.
- Fund‑balance (reserve) levers: change the percentage held in the council reserve (the city currently follows a 17% policy), or “nest” the TABOR (Taxpayer’s Bill of Rights) 3% requirement within the council reserve to free short‑term dollars for one‑time uses.

Senna and Newhart also reviewed Thornton’s reserves: the council reserve was cited at about 17% of operating expenditures (about $38.8 million in staff figures) and the TABOR-required reserve at roughly 3% (about $8 million). Staff emphasized reserves are intended to be a multi‑year safety buffer and warned that using reserves for ongoing operations creates future budget pressure.

Council reaction was cautious. Several members said they were reluctant to reduce reserve levels after the experience of national and local economic volatility, and asked for more detail on the trade‑offs and how proposed actions would affect hiring, service levels and long‑term competitiveness for staff recruitment. Other council members expressed interest in further study of targeted land‑use and development incentives as a way to expand recurring revenues without increasing residents’ tax rates.

Staff described next steps as additional modeling and targeted analyses: run scenarios that show the inflection point under alternative assumptions (lower wage-growth assumptions, different FTE rates, and revenue scenarios tied to particular development outcomes) and return with recommendations on timing, trade‑offs and communications options. Newhart and Senna also asked council for direction on how aggressive the city should be in changing assumptions when staff prepares the 2026 budget recommendations.