Centennial is facing a growing structural funding gap driven primarily by aging infrastructure, rising street maintenance costs, and slowing growth in sales tax revenue. The City projects that annual expenses will exceed revenues through at least 2035, and by 2028 it expects existing funding will no longer cover routine maintenance of roads, bridges, traffic signals, and other transportation assets. Voting YES on a 1% sales tax increase will ensure Centennial a sustainable, long-term funding source for transportation infrastructure rather than continuing to rely on reserves. Visit Centennial’s budget page here.

Centennial continues to attract new businesses, investment and development, but the retail economy has changed significantly since the City was founded 25 years ago. Like communities across Colorado and the nation, Centennial has seen traditional department stores and big-box retailers such as Sears, Macy’s and Best Buy replaced by smaller retailers, services and online shopping.

Centennial’s proximity to major regional shopping destinations also means many retail purchases by residents occur outside the City. Meanwhile, much of the new commercial activity Centennial attracts is service-oriented and therefore does not generate City sales tax in the same way traditional retail does.

These changes do not mean Centennial is losing its economic vitality. They do mean that the City’s traditional revenue model is producing slower growth even as Centennial continues to grow and attract investment. At the same time, the cost of maintaining roads, bridges and other infrastructure continues to increase. That growing mismatch between revenues and costs is one reason the City is seeking a more sustainable source of transportation funding.

Increasing Centennial's sales tax rate from 2.5% to 3.5% would generate approximately $27 million in additional annual revenue which would close the estimated $20+ million annual gap between the $15 million in the Street Fund's dedicated revenues and the at-minimum $35 million needed each year to properly maintain roads, bridges, traffic signals, sidewalks, bike facilities, and other transportation infrastructure.  

Centennial has historically avoided debt, choosing instead to pay for projects as funds become available. This pay-as-you-go approach saves taxpayers interest costs and avoids burdening future residents with long-term obligations, but it also means the City must have sufficient cash to undertake major projects.

Simply closing the $20 million annual Street Fund gap would address ongoing maintenance needs but leave little capacity to tackle the more than $100 million in transportation projects identified in the City’s Transportation Master Plan. Generating approximately $27 million annually provides the flexibility to address more of those projects sooner, respond to rising construction costs and maintain adequate reserves for major repairs and unexpected needs.

A sustainably funded Street Fund also allows Centennial to plan projects efficiently, take advantage of state and federal matching funds when available, and address roads and bridges before deterioration makes them substantially more expensive to repair—all while continuing the City’s tradition of paying as it goes rather than taking on debt.

Centennial’s large total fund balance does not mean the City has an equally large pool of money available for roads. Much of that money is restricted, committed or reserved for other obligations—and the unrestricted money that can be used for streets is already helping to fund them.

Centennial’s total fund balance includes money held in separate funds for different purposes. Some revenues are legally restricted. For example, Open Space Fund revenues received through Arapahoe County’s voter-approved open space tax must be used for qualifying parks, trails and open space purposes, while state lottery revenues in the Conservation Trust Fund are similarly restricted. TABOR also requires local governments to maintain an emergency reserve equal to at least 3% of fiscal-year spending, which cannot simply be used to cover an ongoing revenue shortfall.

Other reserves are established by City policy or committed to specific projects and obligations. Centennial maintains a General Fund operating reserve equal to 25% of expenditures to protect the City against emergencies, economic downturns and unexpected costs.

Most importantly, Centennial is already using available General Fund resources to support transportation. For years, the City has transferred millions of dollars annually from the General Fund to make up for inadequate dedicated Street Fund revenue. The 2026 budget alone includes a $15 million General Fund transfer to the Street Fund. Those transfers can temporarily bridge the gap, but they do not create a sustainable source of transportation revenue. Continuing to spend down reserves and unrestricted fund balances would eventually leave less money available for public safety, capital projects, economic downturns and unexpected emergencies.

Centennial has increased its sales tax rate only once in 25 years. In 2003 voters approved raising the city sales tax rate from 1.5% to 2.5% for its growing transportation maintenance and repair needs. Once again, it’s time to increase our sales tax rate - just one dollar on a $100 purchase - to improve and enhance the quality of life we have come to expect here in Centennial.

If the ballot measure passes, the funds will be expressly dedicated to traffic safety improvements and maintenance of streets, roadways, bridges, sidewalks and other aging infrastructure, including pothole repairs, pavement preservation, pedestrian access improvements and other transportation projects that support safe and accessible travel throughout the City.

At 3.5% - if voters approve the ballot question in November - Centennial’s sales tax rate would still be lower than Littleton (3.75%). Aurora (3.75%), Denver (5.15%), and Castle Rock (4.25%). Increasing the rate to 3.5% would still leave Centennial below the Front Range municipal average of approximately 3.63%.

All purchases currently exempt from City sales tax (utilities, food for home consumption, prescription medications, professional services, and software among them) would also be exempt from the sales tax increase. Rather than broadening the taxable retail base, Council chose to raise taxes only on items it currently taxes - including purchases made by tourists, visitors and commuters who also use Centennial's roads, bridges and sidewalks.

Since incorporating in 2001, Centennial has operated on a pay-as-you-go financial model and has avoided long-term debt to fund routine operations. Rather than financing infrastructure through significant borrowing, the City funded capital improvements with available revenues and reserves.  If we want to continue to avoid the added expense of debt financing, Centennial needs a sustainable, on-going revenue source to address transportation infrastructure needs today. By 2028 it’s estimated that the costs to maintain our transportation infrastructure will exceed expected revenue.

Centennial’s transportation system remains functional and generally well maintained, but it is fast reaching an important point in its life cycle. Much of the infrastructure the City inherited when it incorporated is now 25 to 40 years old, meaning roads, bridges and traffic signals increasingly require major rehabilitation or replacement rather than routine maintenance. Centennial is responsible for 1,150 lane miles of paved streets, 94 bridges and 92 traffic signals, most of those signals themselves 25–40 years old.

The challenge is not limited to pavement. Centennial’s Transportation Master Plan (TMP) identified more than $100 million in needed transportation improvements, including intersection safety projects, bridge repairs, signal improvements and roadway projects.  

Safety is also part of the equation. The TMP found that crashes are concentrated along major corridors, particularly Arapahoe Road, University Boulevard and Smoky Hill Road. University Boulevard alone contains three of Centennial’s five highest-crash intersections, along with concentrations of crashes resulting in deaths or serious injuries. Other notable problem areas include Arapahoe Road east of University Boulevard; Arapahoe between Havana and Potomac; Dry Creek Road near Havana; and University Boulevard near Dry Creek Road. The City's more recent Safety Action Plan continues to identify eliminating serious and fatal crashes as a priority.

Bridges present another long-term obligation. The TMP specifically identifies bridge repair and replacement as a category of necessary capital investment where structures have functional or structural deficiencies. One example is the recently completed replacement of the aging Arapahoe Road bridge over Big Dry Creek; other bridges and minor structures require continuing inspection, maintenance and eventual rehabilitation or replacement.

As anyone who owns a home or a car will attest, older infrastructure gets more expensive the longer major work is deferred. Construction materials, equipment and labor have risen sharply in price, while the purchasing power of transportation dollars has declined. Preventive pavement work can extend the life of a street; waiting until it deteriorates further can require much more expensive reconstruction.

Centennial estimates that maintaining its roads, bridges and transportation infrastructure requires about $35 million annually, while the Street Fund receives only about $15 million in dedicated annual revenue—a $20 million gap. The City has been filling that difference with General Fund transfers, funds that also support pay for law enforcement and neighborhood services – an approach that is sustainable for only about two more years.

This does not mean Centennial’s roads are suddenly failing. Rather, the City has reached a predictable point in the life of a community built largely several decades ago: more infrastructure needs significant work at the same time, while the cost of doing that work is rising and dedicated transportation revenue is not keeping pace.

The challenge for Centennial is a structural divide between available revenues and the growing cost of maintaining aging transportation infrastructure. The difference cannot be solved by reducing discretionary spending. It’s time the City stopped relying on transfers from the General Fund to supplement transportation funding. This approach is no longer sustainable as costs continue to rise and sales tax growth slows. What’s needed to address the gap in funding is a dedicated, long-term funding source.

If voters don’t approve the ballot question, future cuts in services may be necessary, such as: continuing to draw down cash reserves to address the funding gap; paying for capital projects with debt; reducing snow removal, street maintenance, and law enforcement; or some combination of these. Road conditions will continue to decline, traffic safety risks will increase, and major transportation projects identified in the Transportation Master Plan would likely be delayed or deferred.

The ballot question specifically dedicates revenue from the 1% increase to transportation. That includes street maintenance and pavement preservation; repairing and reconstructing roads and aging infrastructure; bridge, sidewalk and pedestrian improvements; traffic-safety projects; and other projects supporting safe and accessible travel. Unlike existing General Fund dollars that can support a variety of City services, the new revenue is restricted to transportation purposes. This provides voters assurance that the additional penny will address the infrastructure needs for which the tax increase is being requested.

Centennial is not facing an infrastructure emergency today—and responsible planning is intended to keep it that way. By 2028, however, the City projects existing revenues will no longer adequately cover ongoing transportation needs. Much of Centennial’s infrastructure is already 25 to 40 years old, while construction, labor and equipment costs continue to increase. Delaying maintenance can also turn relatively manageable repairs into much more expensive reconstruction. Acting now allows the City to address a foreseeable funding problem deliberately, while its finances and infrastructure remain relatively strong, rather than waiting until reserves are depleted or roads deteriorate further.

A sales tax spreads the cost of maintaining Centennial’s transportation system among residents and the many visitors, commuters and shoppers who use City roads every day. A property tax would place that burden primarily on Centennial homeowners and property owners. Sales tax also exempts important necessities, including qualifying groceries and prescription medications. Centennial has relied primarily on sales tax since its founding, and voters last increased the rate in 2003. The proposed increase continues that model while ensuring that people from outside Centennial who shop in the City also contribute toward maintaining the transportation system they use.