Denver's budget crisis eases in 2027, but cuts stick
Add Axios as your preferred source to
see more of our stories on Google.
Denver Mayor Mike Johnston. Photo: RJ Sangosti/MediaNews Group/The Denver Post via Getty Images
Denver is climbing out of two years of budget cuts, with no layoffs planned for 2027 — but Mayor Mike Johnston isn't rushing to restore what was lost.
Why it matters: Johnston's proposed budget, unveiled Thursday, marks a sharp turn from last year's "cuts to the bone" just as he launches his re-election campaign.
The big picture: Johnston is proposing a $1.68 billion General Fund budget, up 1% from this year.
- That keeps pace with the city's projected 1.1% revenue growth — the strongest growth since 2023 — driven by stronger sales tax collections, which account for more than half of city revenue.
What he's saying: "This year we're happy to not be in crisis, but we're still going to be cautious about the ways in which we make investments," Johnston told Axios Thursday.
Flashback: Denver spent the past two years shrinking its General Fund, including laying off about 170 employees and cutting hundreds of vacant positions last year amid a $200 million-plus shortfall.
Yes, but: Those cuts largely aren't coming back. Johnston said departments permanently restructured around core services rather than making temporary reductions.
- Asked about low employee morale following the cuts, Johnston acknowledged workers have endured "hard years." He's proposing merit raises averaging 2% for eligible workers next year.
💰 Follow the money: Most agencies remain roughly flat, but some could see boosts:
- 👮♂️ Public safety spending would reach $662 million, up 2.4%.
- 🛝 Parks and recreation would get $140 million, up 1.8%.
- ⛺️ Homelessness funding would total $84.5 million, including to pilot a dorm-like family shelter.
- 🚸 Safe Routes to School funding would double to $4.4 million.
The intrigue: Denver also expects an extra $3.1 million from traffic tickets as police step up enforcement, plus $2.2 million more from parking meters and bagging fees.
Between the lines: The rosier numbers arrive two days after Johnston launched his re-election campaign, bolstering his argument that his first-term strategy is working.
- He cast the budget improvement as proof that "disciplined budgeting" and "strategic investments" are driving Denver's economic momentum.
- Johnston pointed to downtown — where sales tax collections were up 18% year over year in June — as further evidence efforts are paying off.
Reality check: Denver's outlook has improved, but hurdles remain.
- The city's labor force has declined year over year every month since late 2025, while property tax revenue is projected to fall 3.4% next year.
- And the budget warns that spending is projected to grow faster than revenue over the longer term under most scenarios.
What's next: City Council will debate and propose changes to Johnston's plan before adopting a final budget this fall.