A one-cent increase in Centennial's city sales and use tax for streets, bridges and sidewalks

Centennial's 2.5% city sales and use tax dates from a 2003 vote. Of 38 jurisdictions the city compared, Centennial and Lone Tree have the lowest rate, 2.5%, and the average of the 38 is about 3.63%. Issue 2A would add 1.00%, or $1 on each $100 of taxable purchases, beginning January 1, 2027, "RESULTING IN A TOTAL SALES AND USE TAX RATE OF 3.50%." The question sets no end date.

The tax reaches "SALES AND PURCHASES OF TANGIBLE PERSONAL PROPERTY AND CERTAIN SERVICES." It does not apply to food for home consumption, gasoline, prescription drugs and certain other items listed in the Centennial Municipal Code. The referring resolution says the city's 2.5% rate now applies to retail purchases, taxable services, construction and building materials, motor and other vehicles, and other taxable transactions described in the Centennial Municipal Code.

The January 2026 edition of the Colorado Department of Revenue's rate table, DR 1002, lists five taxes on a purchase in Centennial: 2.9% state, 1% Regional Transportation District, 0.1% Scientific and Cultural Facilities District, 0.25% Arapahoe County and 2.5% city. The combined rate is 6.75% today and would be 7.75% with Issue 2A, the total the Littleton Independent reported in August. DR 1002 lists food for home consumption among the exemptions of the state, the two districts and the county.

Senate Bill 26-172 places the whole of Centennial inside the Front Range Passenger Rail District. The district's Ballot Issue 7A, on the same Arapahoe County ballot, would add a 0.333% sales and use tax for passenger rail, with exemptions under Colorado law that include gasoline, food, residential electricity and gas, prescription drugs and medical supplies. Each is a separate question, and either can pass without the other.

The question opens: "SHALL CITY OF CENTENNIAL TAXES BE INCREASED $27 MILLION ANNUALLY, AND BY WHATEVER ADDITIONAL AMOUNT IS RAISED ANNUALLY THEREAFTER." The revenue and any investment earnings on it would be collected and spent "AS A VOTER APPROVED REVENUE CHANGE" under Article X, Section 20 of the Colorado Constitution, the Taxpayer's Bill of Rights (TABOR), or any other law. The August 11 staff memo says the authorization "establishes the legal authority for the City to collect, retain, and spend revenues generated by the voter-approved tax rate."

The version the city tested with voters in June read $23 million. A July 21 staff report explained that figure. The current 2.5% rate raises about $52.0 million for the General Fund and $2.8 million for the Street Fund. Staff projected one percentage point would yield about $21.9 million before growth, and the city set its estimate "conservatively toward the higher end of projected first-year collections." For the August 11 meeting, City Manager Matt Sturgeon and Finance Director Jeff Cadiz wrote that a revised forecast, using sales and use tax receipts through July 2026, put the estimated yield at "approximately $27.0 million annually." They wrote that revenue "may be lower or higher," and that because TABOR authorization amounts work as a ceiling, "jurisdictions commonly set the authorized figure at or above the projected revenue."

Issue 2A directs the city to spend the money "FOR PUBLIC WORKS RELATED SERVICES SUCH AS" three groups of work: traffic safety improvements and street maintenance, including pothole repairs and pavement preservation; repairing and reconstructing roadways and aging infrastructure in neighborhoods and "KEY CORRIDORS"; and bridge, sidewalk and pedestrian access repairs and improvements.

The adopted language differs from the version tested in June, which would have spent the money "TO MAINTAIN VITAL CITY SERVICES FOR LOCAL RESIDENTS INCLUDING" four groups of work, the fourth being "OTHER TRANSPORTATION PROJECTS THAT SUPPORT SAFE AND ACCESSIBLE TRAVEL THROUGHOUT THE CITY." The June version also read "CITY STREETS" where the adopted text reads "KEY CORRIDORS." The August 11 redline replaced that phrase with the public works wording and struck the fourth item.

The August 11 staff memo reads the adopted language as dedicating the revenue to public works services "in the Street Fund," and the city's measure page says the same. The question also requires all resulting revenue and spending to appear in the city's annual independent audit, published on its website and reviewed by the Centennial Audit Committee and council. Resolution 2026-R-26 states that its approval does not raise the rate, and that if the measure passes "an ordinance will be required to implement any change to the sales and use tax rate." It also provides that if the question fails, earlier voter approvals of the city's existing taxes and of its permission to keep revenue above TABOR limits stand.

The council created the Street Fund through Ordinance 2019-O-29, beginning with the 2020 budget, as a single fund for street, sidewalk, bridge, traffic signal, streetlight and curb-and-gutter construction and maintenance. The July 21 staff report puts its yearly operating cost at about $35.8 million: the public works services contract with Jacobs ($17.3 million in 2026), street rehabilitation and pavement preservation ($13.5 million) and about $5 million in other costs such as signal maintenance, snow and ice control, fuel and utilities. Its dedicated revenue, about $14 million to $15 million, comes from the $2.8 million share of the 2003 sales tax, the motor vehicle use tax, Highway Users Tax Fund allocations and the road and bridge shareback. The General Fund has covered the gap with transfers of $12.0 million in 2022, $25.0 million in 2023, $32.5 million in 2024 and $30.0 million in 2025, and $15.0 million is budgeted for 2026.

The city gives examples of rising costs. Four traffic signals or intersections cost $350,000 in 2019 and $900,000 in 2026, and repaving one lane mile cost $143,693 in 2020 and $206,922 in 2026.

Staff described the $23 million as approximately equal to the Street Fund's operating gap of about $20 million to $21 million a year, and projected that it would let the Street Fund "operate largely on its own dedicated revenue." Staff wrote, "Based on current projections, this is expected to eliminate the need for General Fund transfers to support Street Fund operations." The report, written for the $23 million version, adds that this "would relieve pressure on the General Fund's existing cost obligations" and that transfers would still be needed to save for capital projects. In Resolution 2026-R-26 the council states its belief that the increase "will cover the budget gap with sufficient revenue to save for future projects."

Sales tax is about 60% of General Fund revenue and property tax about 17%.

Law enforcement comes from a contract with the Arapahoe County Sheriff's Office. That contract grew from $23.3 million in 2016 to about $43.6 million budgeted for 2026, while General Fund sales tax revenue grew from $38.8 million to $52.0 million budgeted for 2026. Public safety is about 60% of General Fund operating spending, and the July 21 staff report calls it the city's "largest cost center," one "growing faster than its single largest revenue source."

In 2020 the city identified the need for a long-range financial model and hired a consultant to build it. The initial modeling projected ongoing costs growing faster than ongoing revenue, and staff wrote that the city had, and still has, sufficient reserves to manage the imbalance in the near term. In June 2021 the Centennial Budget Committee recommended that the council begin evaluating options including "seeking additional revenue, including an increase in the City's general sales tax rate."

A September 8 staff memo reports that in 2025, by audited results, General Fund revenue was $97.2 million and expenditures before transfers were $62.5 million, a $34.7 million excess. That year the General Fund transferred $30.0 million to the Street Fund, $5.0 million to the Capital Improvement Fund and $2.9 million to the Open Space Fund, and its fund balance declined by $2.8 million. City governmental funds held $170.4 million at the end of 2025, including $51.7 million in the General Fund and $71.4 million in the Street Fund, most of it restricted by law or committed or assigned to planned projects, according to the same memo. The proposed 2027 and 2028 budget does not assume the tax passes. It plans a General Fund transfer to the Street Fund estimated at $37.45 million in 2027, which staff describes as a catch-up from favorable 2025 results and the 2026 year-end estimate, and $15.0 million in 2028. If voters reject the measure, the memo says, the council may need to weigh using fund balance for ongoing operations, including the Street Fund's operating costs, instead of saving it for capital projects. If voters approve it, staff will bring a recommendation to the council, either as an amendment to the 2027 budget or in the second year of the 2027 and 2028 budget.

The city's August 12 news release says the General Fund savings and cash reserves it has used to cover the street gap are projected to be exhausted by 2028.

In 2003 the city put Ballot Issue 2G to voters: a tax increase of $7,350,000 a year "AND BY WHATEVER ADDITIONAL AMOUNT IS RAISED BY THE IMPOSITION OF AN ADDITIONAL 1% CITY SALES AND USE TAX," bringing the rate to 2.5% from January 1, 2004, until repealed. It restricted the use tax on vehicles to transportation, and "50% OF THE REVENUES, NOT TO EXCEED $2,800,000 ANNUALLY," of the added sales tax to transportation and drainage. Voters approved it. The Street Fund still receives $2.8 million a year from that allocation.

Voters have also let the city keep revenue above TABOR limits, most broadly through Ballot Measure 2D in 2012, which lets it keep revenue from all its existing sources.

The city hired Magellan Strategies to survey 1,145 registered voters from June 18 to 24, 2026, on the $23 million version of the question, with a margin of error of plus or minus 2.88 percentage points. Asked about the 1% increase with no background, 51% said they would vote yes and 42% no.

At the July 21 meeting, Council Member Steve Carmine said, "There’s really not a lot of meat on the bone here," the Littleton Independent reported. Council Member Richard Holt said there were options the council had never seriously considered and that it had not discussed rates other than 1%: "We owe this to the citizens of Centennial, who we’re looking in the eye, and saying ‘give me more money.’"

On August 11, residents spoke for and against the measure during public comment, and the council adopted Resolution 2026-R-26. Mayor Christine Sweetland and Council Members Carmine, Dwiggins, Middleton, Sandhu, Tharp and Vaidya voted yes; Holt and Sheehan voted no. By the same 7-2 vote, the council approved Resolution 2026-R-25, an agreement with Arapahoe County to hold the election, which staff estimated would cost $85,000.

John Brackney, one of the city's founders, told the Littleton Independent that he would vote against a 1% increase but would support one closer to 0.5%. "This is not the time to ask people who are really suffering for a sales tax increase," he said. Karli Millspaugh, a local business owner, told Denver7 she is not worried about losing shoppers to neighboring cities: "At the end of the day, 1% is so little."