HomeMy WebLinkAboutMemo - Mail Packet - 09/23/2025 - Memorandum from Adam Molzer re September 4, 2025 Council Finance Committee (CFC) Meeting: Follow-up on Grocery Tax Rebate Budget
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Memorandum
Date: September 18, 2025
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
Tyler Marr, Deputy City Manager
Caleb Weitz, Chief Financial Officer
Chad Crager, Fort Collins Connexion Executive Director
Jacob Castillo, Chief Sustainability Officer
From: Adam Molzer, Human Services Program Manager, Social Sustainability,
amolzer@fcgov.com
Jeff Rochford, Manager, FP&A, Broadband, jrochford@fcgov.com
Subject: September 4, 2025 Council Finance Committee Meeting: Follow-up on Grocery
Tax Rebate Budget
The purpose of this memo is to provide context regarding the 2026 budget revision for the City’s
Grocery Tax Rebate Program, as informed by the Council Finance Committee’s feedback at their
September 4, 2025, meeting.
Background
The Grocery Tax Rebate Program provides financially insecure residents relief from City sales
tax charged on purchased food. The rebate amount is currently $80 per eligible household
member, annually. The growing popularity of the Get FoCo online platform has caused the
grocery tax rebates issued to repeatedly exceed the annual budget.
Discussion Summary
Staff shared the history and participant demographics of the Grocery Tax Rebate program,
recent budget trends, tradeoffs of using Digital Inclusion reserve funds to fill budget
overspending, and potential programmatic changes to achieve a balanced budget in 2026.
Summary of Feedback
Docusign Envelope ID: 26CDC9F4-5F22-44A6-881E-D34D704BEF1A
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To meet the 2025 rebate funding needs, Council Finance Committee supported the use of
up to $320,000 in Digital Inclusion reserve funds to make the budget whole.
Recognizing the economic needs of limited-income residents, Council Finance Committee
does not support significant changes to the rebate program’s design or eligibility criteria.
There was some openness for potential limited changes, which may not significantly reduce
the rebate budget obligations.
Council Finance Committee prefers that the Grocery Tax Rebate Program be fully funded
and not suspended when the current $450,000 budget is exhausted in 2026.
To meet the 2026 rebate funding needs (anticipated to be up to $415,000 over budget),
Council Finance Committee supported a revision offer to come forward for full Council
consideration.
Next Steps
Digital Inclusion reserve funds will be used to make the 2025 Grocery Tax Rebate budget whole.
Staff is recommending a one-time funding solution for using Digital Inclusion reserve funds
to cover the budget gap in 2026, which will be submitted to Council as a revision offer.
o Following the Council Finance Committee discussion, staff updated the Digital Inclusion
forecast to include projected program underspend in 2025-2026. Earlier projections were
alone based on 2024 fund balances. Various factors have contributed to underspend in
the Digital Inclusion funds, including:
The staff position supported by Digital Inclusion reserve funds is currently vacant
and frozen due to the hiring freeze, creating substantive savings.
o As a result, utilizing Digital Inclusion reserves to cover Grocery Rebate needs in 2025
and 2026 is not currently expected to significantly impact Connexion’s future financial
performance.
o The cost savings from the Digital Inclusion budget are being treated separately from
other segments of the general fund, so these savings are not being counted elsewhere.
Docusign Envelope ID: 26CDC9F4-5F22-44A6-881E-D34D704BEF1A
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o The Digital Inclusion reserve fund balance is currently anticipated to be $750,000 at the
end of 2026, if the fund is used for both 2025 and 2026 as the one-time funding solution
for grocery tax rebates. This anticipated end-of-2026 balance now aligns more closely
with the end-of-2025 balance forecast presented to Council Finance Committee.
Modest programmatic changes will be further reviewed to evaluate if budget savings can be
achieved without compromising the customer experience or justifiable rebate benefit of
eligible Fort Collins residents. A memo will be shared with Council in Q4.2025 detailing any
program changes identified for 2026.
Resolving the Grocery Tax Rebate annual budget shortfall will require a long-term solution
which will be considered in the 2027-2028 budget process.
CC: Chad Wright, Housing & Community Vitality Department Director
Claudia Menendez, Equity & Inclusion Officer
Lawrence Pollack, Budget Director
Wendy Bricher, Finance Analyst – Sustainability Service Area
Docusign Envelope ID: 26CDC9F4-5F22-44A6-881E-D34D704BEF1A