Early indicators for Colorado Springs’ city budget showed a steady financial start to the year, at least before the war with Iran and more recent global upheaval.

City Finance Director Charae McDaniel presented a quarterly budget update to the City Council during its Monday morning work session. The presentation covered Colorado Springs’ sales tax revenue from the end of last year and the early indicators from the first month of 2026.

Colorado Springs had budgeted a roughly $11 million decline in the city’s general fund revenue heading into this year as the city’s sales tax revenue flattened instead of growing as expected well into 2025. The city instituted staff furlough days and other cuts in order to balance the budget.

McDaniel said that after the budget was set in September, the city had finished 2025 with a slight increase in sales tax revenue from what had been budgeted.

That starting point meant the city needed an average sales tax revenue increase of 0.9% from last year to 2026 to stay on track with the current budget. The sales tax report covering January showed 0.88% growth.

“With one data point so far in the year, we’re tracking to budget. It’s a win. I’ll take it,” McDaniel said.

General retail sales and restaurants, which are two of the largest categories of sales tax revenue, increased by more than $100,000 year-over-year according to the January report. On the other hand, sales tax revenue declined for major purchases such as car dealerships and furniture.

The city expenses for the year also appeared to be on track, based on the amount spent on salaries and benefits to start the year.

McDaniel was asked by the City Council leadership to provide more frequent reports on the city budget and plan for contingencies around future economic issues.

A two-month delay for analyzing city tax revenue meant that the impacts of the war with Iran, which started Feb. 28, or the surge of oil prices are not reflected.

“Things could change, because that’s a big wild card that was tossed on the table since you made this,” councilmember Dave Donelson said.

“We have quite a bit of uncertainty at the federal level, and obviously, any types of global conflicts or global uncertainties will impact it. The way we will see that is how the consumers in our city feel about spending their money,” McDaniel said.

The biggest decline highlighted in the budget was the lodging and auto rental tax (LART), which brings in around $10 million each year for the city to put into supporting local events. The tax revenue for that fund was on track to come in around $200,000 lower than expected.

McDaniel said that the number of hotel rooms booked in 2025 was down slightly. The bigger reason, according to data provided by Visit Colorado Springs, was that the average daily cost for a hotel room declined by 6%. McDaniel said that change appeared to be part of a national trend with hotel prices.

The next quarterly report is likely come during a work session in June.

u003ca href=u0022https://gazettedev.gazette.com/2026/03/04/gas-prices-spike-in-colorado-springs-but-reason-goes-beyond-war-in-middle-east/u0022u003eGas Prices in Colorado Springs increase as seasons changeu003c/au003e: ‘It’s a win’: Colorado Springs started year on track for 2026 budget u003ca href=u0022https://gazettedev.gazette.com/2025/11/25/colorado-springs-city-council-approves-the-citys-2026-budget/u0022u003eColorado Springs City Council approves the city’s 2026 budget – Colorado Springs Gazetteu003c/au003e: ‘It’s a win’: Colorado Springs started year on track for 2026 budget