Not all of the financial news for Colorado Springs is rosy, but the city’s sales tax revenue has been stronger than expected heading into the summer.

Finance Director Charae McDaniel presented the largest financial update of the year during the Colorado Springs City Council’s work session Monday. While McDaniel had given a similar presentation in March, the update Monday was the first to detail months of the city’s 2026 revenue.

Over the first three monthly sales tax reports of the year, the fund has brought in 4% more revenue than it did last year. McDaniel said the preliminary data for sales made in April and collected by Colorado Springs in May are also in line with that 4% increase.

The increase equates to roughly $2.5 million more net revenue for the city than it received in the first quarter of 2025.

“At this point in time, if things track as they are, we will meet the budget without any additional actions needed,” McDaniel said.

The sales tax growth was a promising start amid the cuts made to the 2026 budget, after sales tax revenue came in millions of dollars lower than expected. The decline in sales tax revenue accounted for around a third of the $31 million budget reduction Colorado Springs made for this year.

McDaniel said the revenue was strong enough that the city should be able to avoid any further cuts this summer. On the other hand, she said that city leaders shouldn’t begin undoing furlough days and other budget restrictions until they saw a few more months of evidence.

“Are we making any moves? My answer is not if I can help it, because I think that we need to be prudent. We have a lot of these indicators pointing in all different directions,” McDaniel said.

Many of the other revenue sources and economic indicators for the city were much more mixed. The lodging and auto rental tax (LART) fund is down around 2.8% compared to the start of 2025, largely due to big drops in January and February.

The biggest concern in McDaniel’s presentation was the number of permits issued for single-family home construction. Data collected from the Pikes Peak Regional Building Department showed that permits have declined for the last two months and are now 4% below what was issued last year. Councilmember David Leinweber pointed out that since 2025 was a down year for home permits, another decline would be significant.

Councilmember Brian Risley vocally advocated for the city to keep a flat projection for sales tax in the 2026 budget, instead of the expected 1.4% increase that ended up passing. Risley said the permit data and national economic trends kept him concerned for the rest of the year.

“I would have been more comfortable if we stayed flat, but I lost that argument and we’ll see how it shakes out,” Risley said.

Work is already underway on Colorado Springs’ budget for 2027. McDaniel said that the first major meeting with department leaders about their budget priorities for next year will be later in June. McDaniel estimated the city will have about two more months to collect data before the first detailed budget projection comes in August.