Boulder says state marijuana-tax change will cut about $150,000 from general fund

A June 11 memo to Boulder City Council says a state tax change is expected to reduce the city's General Fund revenue by about $150,000 by ending Boulder's share of state retail marijuana sales-tax revenue.

The memo identifies House Bill 26-1409 as the clearest direct local fiscal effect from this year's legislative session. The official state bill summary says the measure eliminates the 3.5% distribution of retail marijuana sales-tax revenue to local governments and redirects that money to state funds.

That leaves the marijuana-tax change as the one quantified Boulder-specific loss described in the memo. Other concerns outlined for council were broader: state budget actions that staff said could reduce funding streams the city relies on for transportation, housing and some employee-wellness programming.

According to the memo, Boulder supported a Senate amendment that would have limited the marijuana-tax change to the 2026-27 fiscal year, but the House did not adopt it. The memo also says the city could consider raising its local recreational marijuana tax to offset the loss, though it does not say City Council has decided to pursue that option.

The transportation risk described in the memo is less direct. Staff said HB26-1398 reduces spending from the state's Multimodal Transportation and Mitigation Options Fund by $1.7 million in 2026-27 and $3.1 million in 2027-28 for local multimodal projects. Staff also pointed to HB26-1399, which the state says removes the annual $10.5 million General Fund transfer to that fund for 2026, 2027 and 2028 and cuts a related Colorado Department of Transportation appropriation for 2026-27.

The memo says Boulder receives multimodal funding directly and indirectly through the Denver Regional Council of Governments transportation improvement program, so those statewide reductions could affect funding sources for corridor safety work and other local projects. But the memo does not assign Boulder a specific dollar loss from those changes.

Housing exposure is similarly broader than direct. Staff said HB26-1360 transfers $130 million from the state Affordable Housing Financing Fund to the General Fund for one year. According to the city memo, that could reduce the statewide balance available for concessionary debt, land banking and equity programs, which in turn could mean fewer grant opportunities for local governments, housing authorities and affordable-housing developers. The memo does not identify a specific Boulder project or budget line that has already been cut.

The memo identifies one smaller program that could be affected by a state cash-fund sweep. Staff said HB26-1405 moves money from several state funds, including the Peace Officers Mental Health Grant Program. Boulder currently has a $30,000 grant that runs through June 30, 2026, according to the memo, and pays for police wellness events, peer-support training and support for officers dealing with mental health or substance-use issues. Staff said future reductions in that program could affect the city's ability to continue similar services.

Council was not asked to take formal action on the memo. It says no formal council action was required and does not lay out a detailed mitigation plan.

For now, the city's update draws a distinction between one immediate, city-specific revenue hit and a wider set of state budget actions that may affect Boulder later through competitive grants, housing finance and transportation funding streams. Boulder has attached a number to the marijuana-tax loss, but the memo does not yet say which transportation or housing projects, if any, would lose money or whether city leaders will propose a tax increase or another budget response.