Denver braces for layoffs and service cuts amid budget crisis
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Facing a $250 million budget crisis, Mayor Mike Johnston on Thursday announced sweeping cost-saving measures, including layoffs, furloughs and a hiring freeze.
The big picture: Falling revenues, rising costs and global economic instability left city officials anticipating a $50 million gap in this year's budget and a $200 million budget shortfall for 2026.
Why it matters: Core city services and major initiatives — including Johnston's signature homelessness strategy — could be on the chopping block.
Threat level: The hiring freeze started immediately, while furloughs start June 1.
- Every one of the city's 27 departments has been told to stay within its budget — or trim it. Contracts are being reviewed for possible cuts, including eliminating some programs.
State of play: The city's financial woes stem from a combination of a projected drop in tax revenue, rising spending on city personnel and rising contract and service obligations.
- Tax revenue is expected to take a hit as consumers pull back on spending due to concerns about tariffs and unemployment.
- Up to $200 million in federal funding could also be slashed by the Trump administration, compounding the squeeze.
Between the lines: It's still unclear how many jobs will be lost, or which services will be scaled back.
Zoom in: Johnston's homelessness initiative is likely to see significant reductions, he said.
- He's also ordering departments to boost efficiency, potentially replacing some human workers with automation and AI.
- Public safety departments will see the lightest touch. Police Chief Ron Thomas told us the hiring freeze won't affect his agency, which has been tasked with hiring 168 officers this year.
The intrigue: Even as cuts loom, Johnston is pressing ahead with splashy — and costly — economic development plans, suggesting these projects will spur long-term growth and job creation.
- He's betting big on an $800 million bond package that would fund infrastructure and housing, which he plans to put before voters this fall, and is still backing a $70 million public-private partnership to build a new women's professional soccer stadium.
- Johnston says the money Denver's committing to the stadium project is earmarked for capital improvement projects, so it can't be used for the city's operating costs.
Between the lines: Johnston has shelved, at least for now, a controversial proposal to hike salaries for his top appointees.
The bottom line: Despite the looming uncertainty, Johnston painted an optimistic outlook.
- "We will come out on the other side stronger, with a government that we think is faster and smaller and easier to navigate, but that still meets big goals," Johnston said Thursday.
What's next: The mayor will present his proposed 2026 budget by mid-September. Expect a month of budget brawls with the City Council before a final vote is due by Nov. 10.