Manitou Springs is grappling with a significant budget shortfall, projected at $4.3 million for the upcoming fiscal year. This financial challenge arises primarily from a substantial decline in marijuana tax revenue, a consequence of neighboring Colorado Springs legalizing recreational marijuana sales in April 2025.
For years, Manitou Springs benefited from being one of the few municipalities in the region permitting recreational marijuana sales, with tax revenues from these sales constituting approximately 30% of the city’s budget. However, the recent policy change in Colorado Springs has led to a sharp decrease in customers patronizing Manitou Springs’ dispensaries, resulting in a notable drop in tax income. Mayor John Graham highlighted the impact, stating, “The Manitou share of the market has changed substantially.”
In response to the anticipated budget deficit, city officials proposed Measure 2A, which sought to increase the excise tax on ticket sales and admission fees, primarily affecting tourism-driven businesses. The measure aimed to offset the revenue loss from marijuana sales. However, in the November 2025 election, approximately 56% of voters rejected the proposal, leaving the city to explore alternative solutions to balance the budget.
City leaders are now considering various strategies, including potential service cuts, new fees, or tax adjustments. Community involvement is being encouraged to identify viable solutions that align with residents’ priorities and maintain essential services. Mayor Graham emphasized the importance of proactive planning, noting, “In the last five or six years on city council, we’ve always feared what would happen if we lost the money. We’ve, I think, tried to tackle a lot of capital improvement projects and other projects to get the city a little more up to standards, to use the money while we had it.”
As Manitou Springs navigates these financial challenges, the city remains committed to preserving the quality of life for its residents and sustaining the vibrant character that defines the community.