Press Release Manitou Springs’ 2026 budget gap

First-of-its-kind 'balanced approach' unveiled to bridge Manitou Springs' 2026 budget gap; Two-pronged plan combines parking revenue and a proposed increase to the 'amusement tax'

MANITOU SPRINGS CO - Courtesy of Manitou Springs City Administrator Denise Howell

On July 29, 120 citizens attended the Manitou Springs City Council's special meeting to learn about the city's anticipated $4.3 million shortfall for the next budget year. Since Colorado Springs began permitting recreational marijuana sales in April, the increased competition has hit the two marijuana retailers in Manitou Springs hard. It's a sector of the economy that was a boon to Manitou since 2014, contributing approximately 30% of the city's budget.

Afterward, Councilor John Shada said, "We held the meeting to demonstrate to the community that we're all in this together. For a community this size, this budget gap could mean a loss in funding for much-needed services like the ambulance and loved services like the Pool and Fitness Center. We want to address this head-on, so we've looked at several options that would sustain the necessary services we need to maintain our quality of life in Manitou Springs."

Councilor Shada and Mayor Pro Tem Natalie Johnson, tasked by the city council with developing ideas to address the problem, gave a presentation of the options.

How marijuana tax revenue enhanced Manitou Springs

For over a decade, Manitou Springs made good use of the added marijuana tax revenues, enhancing infrastructure and services throughout the city. At Tuesday's meeting, Councilor Shada listed various accomplishments, including upgrades to both the East and West ends of the city, the completion of the new ADA-accessible library and the acquisition of an in-house ambulance, which saved lives. He said the city installed ADA-accessible restrooms at the Pool and Fitness Center, Fields Park, Schryver Park and the police station. Additionally, the popular Creekwalk trail was improved, 339 trees were planted, and flood mitigation was performed in Williams Canyon with FEMA matching funds.

Options to bridge the budget gap

Councilor Shada then presented a stark new reality, stating that many of the amenities he had mentioned could see their budgets reduced or even eliminated. This could happen if the city chose to make up the gap solely by slashing the budget. Public safety could be compromised, such as ambulance service, policing, the fire department, snow plowing and other city services. He observed that Manitou could become a diminished community.

Additional options discussed included tripling the city's portion of property taxes, which Councilor Shada said would amount to approximately $1,400 per year on a $500,000 house; or doubling the city's general sales tax, adding about $74 in total taxes for a $1,100 refrigerator delivered to Manitou.

Mayor Pro Tem Johnson presented two more ideas for bridging the budget gap. One called for more than quadrupling our current "amusement tax." Officially, the "amusement tax" is the Excise Tax on Ticket Sales and Admission Fees as defined by the City Code. If it were to happen, it would be the first tax increase on the amusement sector in 53 years (since 1972), and it would add $18 to a $99 admission fee or ticket sale.

Mayor Pro Tem Johnson presented The Balanced Approach, which could solve the budget crisis with a two-pronged plan: 1) an "amusement tax" increase of 9% to make up $2.4 million, and 2) a strategic use of parking revenues estimated at $1.9 million to cover the streets department.

A sensible plan

"This is a sensible plan to invest in our quality of life and commit to the long-term health of Manitou Springs. It's a remedy that wouldn't reduce city services or increase property taxes or sales taxes. The additional tax on amusements in the balanced approach only adds about $6 to a $67 train ticket, which is about the cost of a cup of coffee. It's something we believe residents, business owners, and visitors can get behind. I fully endorse this plan," said Mayor Pro Tem Johnson following the meeting.

Feedback forms from attendees indicated that 88% supported the 9% increase on the "amusement tax." For any of the tax increases to become law, voters would need to cast their ballots in favor of them. After the presentation, before moving to the second agenda item, Mayor Graham addressed the audience.

"I want to thank you all for coming here tonight. This is small town America, and it doesn't get more American than this - to have you here, for you to share your ideas with us, and for Natalie and John to present some ideas. We appreciate that very much," said Graham.

Next steps

After the presentation, the council directed city staff to prepare ballot language for the Aug. 5 City Council meeting. Community members may contact individual city councilors to discuss the issue. Click here to view the City Council meeting from July 29, 2025 (Link). All public documents are available for review at this link: Agenda Packet July 29, 2025 (Link). To learn more, watch a short video at https://bit.ly/manitou9.