Layoffs, furloughs coming for Denver employees amid budget crisis, mayor says

Denver city officers will have to lay off employees institute a hiring freeze and require unpaid furloughs as they stare down a projected million budget hole over the next two years Mayor Mike Johnston broadcasted Thursday It s not yet clear how several layoffs will be necessary or how city services will be affected but deep cuts are unavoidable Johnston noted Sales tax revenue which makes up more than half of Denver s income has slumped while the city s costs are growing In an unique interview with The Denver Post ahead of the announcement Johnston revealed the constraints couldn t be addressed with small adjustments like let s buy fewer pencils These are structural problems he explained The city will collect million less in tax revenue than expected this year triggering various immediate cost-saving measures like the hiring freeze and limiting any unnecessary staff spending All city departments have also been recounted not to go over their allotted budgets and to look for any contracts that they can reduce Next year Denver s budget shortfall is expected to grow to million Making matters worse is the ongoing threat from President Donald Trump to eliminate up to million in federal grants the city receives annually The cuts come as Johnston says he will continue to press forward on projects like a million assets in a new women s soccer stadium an million bond proposal and his homelessness initiative which costs about million per year He hopes those projects will help jumpstart the city s business activity There are only two solutions to this One is you have to cut costs and the second is you have to increase revenue You have to grow your way out of this he explained The city s reserves are also at a historic low with only about of the budget set aside as a rainy day fund Johnston called that the hard deck and revealed without major changes to the budget it would drop to No one s ever gone below before he reported Each city employee except for uniformed law enforcement fire and personnel will be required to take at least two days of unpaid furlough Those will all happen at the same time the Friday before Labor Day and the Friday after Thanksgiving Day There will be additional floating furlough days based on salaries with the highest-paid employees including the mayor and his senior staff taking up to seven days without pay Projects that could be impacted The mayor s homelessness initiative All in Mile High is likely to see selected reductions but will proceed he stated We view this as an outlay that s driving economic advancement at the same time as providing services to people who need it he announced We will make overall effort cuts in that like we will everything else They will ostensibly be smaller than other departments Inhabitants safety programs will see the smallest budget reductions he explained Johnston s administration will move forward with a -seat National Women s Soccer League stadium in the Baker neighborhood which includes plans for a mixed-use improvement Under the deal which the City Council tentatively approved this month the city agreed to put up million to pay for the land and improvements to the area Johnston revealed the stadium project will serve as a catalyst for economic progress Preponderance economists disagree with the idea that populace capital in sports stadiums provides much financial benefit for the cities where they are located He will also proceed with asking voters to approve the city s million Vibrant bond package which would greenlight shovel-ready construction projects throughout the city Johnston revealed that will create thousands of jobs Over the coming months each city department will be petitioned to look for tactics it can reduce its workforce and make its services more efficient through automation including by using artificial intelligence Departments will also look for any regulations and red tape that can be eliminated Johnston revealed he has talked with each department head and has ideas of where they might be able to make cuts while maintaining services for residents We are going to try in every way we can to avoid services being impacted Johnston explained I don t know that it will be workable He mentioned while layoffs are a last resort he doesn t see any way to avoid them He didn t provide details on how numerous layoffs will be necessary when they will take effect or which departments will be impacted How the city got here There are several factors that led to the budget situation One is worldwide economic uncertainty amid Trump s tariff agenda which has led to a decrease in both consumer spending and related sales tax revenue About of the city s budget comes from sales tax That has led to revenue improvement being essentially stagnant in the past two years whereas it was growing about annually in the previous decade The city s reserves which are typically used to help backfill the budget during intricate times are also depleted In eight of the past years Denver has spent more than it brought in The city mostly under Mayor Michael Hancock s administration during that period was repeatedly spending more than it brought in and backfilling the lost dollars using the city s reserves Johnston commented The American Rescue Plan Act helped cushion the city s budget for a scant years but that federal COVID- relief money has since dried up Johnston s office reported it attempted to scale back the budget last year and still ended up with lower revenues than expected Based on historic projections the city also initially estimated it would bring in an additional million in revenue next year Now with flat revenue that advancement is unlikely Instead costs increased by million as the city authorities staff and personnel costs have grown and contracts have gotten more expensive due to inflation The combined increase in costs and decrease in revenue progress creates the million gap reported Laura Swartz the communications director for the Department of Finance The city also stands to lose hundreds of millions of dollars in federal grants if Trump is fruitful in redirecting the dollars elsewhere The Federal Emergency Management Agency has already pulled back about million in promised grant money that the city spent to shelter settlers Denver is now suing the federal governing body over those dollars which were intended as a reimbursement Related Articles Denver again delays decision on million expansion of National Western Center Denver postpones effort to give critical raises to Mayor Mike Johnston s top appointees Denver council poised to approve new tech rules for scooters to keep riders off sidewalks Denver sues Trump administration over million withheld by FEMA Should Denver allow exemptions for Waste No More ordinance Initiative s backer objects to changes Trump has targeted Denver and Colorado along with several other cities and states over their policies that restrict how much local law enforcement can coordinate with immigration administrators The U S Department of Transportation also in recent times sent a letter to the city saying it will only dole out grants to cities that agree with the president s view that diversity equity and inclusion policies are prohibited by federal law Preponderance of the federal grants the city receives are for construction If the city can t get those promised funds they will have to halt ongoing projects like the Colfax Avenue bus rapid transit project Johnston revealed Over the next four months department heads and Johnston s cabinet will make the decisions around where the cuts will be before his proposed budget is due to the City Council on Sept They must approve a budget for by Nov Stay up-to-date with Colorado Politics by signing up for our weekly newsletter The Spot