"We'll have to look at the reduction or elimination of programs. We'll have to look at the consolidation of departments, and, yes, we will have to look at layoffs," Johnston said at a press conference on Thursday, May 22. "We do not envision a scenario where it is possible to right-size this budget without that impact on personnel. I shared that with our employees this morning."
Johnston blamed the looming budget deficit on an increase in city employees, services and contracts despite flattening revenues. A "collapse in consumer spending" has led to "near-zero" revenue growth for the city during the past three years, Johnston added. City revenue for the 2024-2025 fiscal year has come up $50 million short of projections, he said.
At the same time, the cost to keep the Denver city government running has increased by 83 percent during the past twelve years because it's growing too fast, according to the mayor.
At the same time, the cost to keep the Denver city government running has increased by 83 percent during the past twelve years because it's growing too fast, according to the mayor.
"We went from 10,000 employees to 15,000 employees over the past twelve years. In addition, we saw a 70 percent growth in contracts and services over that same period. We have nearly doubled the size of government during the past twelve years," Johnston said. "That's unsustainable growth of government. It is not possible to support that level of growth and the quality of services required at this pace."
The city will enact an immediate hiring freeze that will last at least until September 15 as well as limit spending any money that isn't already committed, reduce and restructure contracts, and put a furlough system in place. The layoffs will come in 2026, although the city hasn't revealed how many of its employees will lose their jobs. Johnston clarified that sworn police, fire, sheriff and 911 personnel won't be affected by the furloughs.
The furloughs will start in June and last until the end of the year, and will force city employees to take two to seven unpaid days off based on their income. The lowest-paid employees will have to take two days off while the highest-paid employees, including the mayor, will have to take seven days.
Despite layoffs and furloughs, the city will still spend $812 million on a planned expansion for the National Western Center, which hosts the city's beloved stock show, and a new stadium for Denver's incoming professional women's soccer team. On Monday, May 12, the Denver City Council set aside $70 million for the 14,500-seat soccer stadium, which would open in 2028 if it gets City Council approval.
When asked why the soccer stadium funding should not be redirected to support city employees instead, Johnston explained that the millions proposed for the stadium and western center are tied up as capital improvement funds, which can only be used for buildings, not for employees or services.
"When we look at the investments we make in things like the stadium and stock show, those are capital dollars only used for capital expenditures to build things," Johnston explained. "They cannot, by definition, be used to fund a program or a person in the general fund. These gaps that we're explaining are just general fund dollars."
Johnston also stood behind the city spending about $240 million during the past three years on the dual crisis of homelessness and the influx of migrants. This included housing both groups and services like case management for the homeless and job training and rent payment for the migrants.
The mayor defended his spending by arguing that businesses benefited from the city clearing homeless and migrant encampments. He didn't touch on migrants much, but talked about the aftermath of sweeping a homeless encampment that wrapped around the U.S. Post Office at 951 20th Street in late 2023 as an example of success. Once the largest encampment in the city with more than 200 tents, it almost forced the post office to shut down, but business in the area has improved, according to the mayor.
"We do not have any encampments in our city center. We don't have any large encampments anywhere in this city. If you are running a business in the city or having a home in the city, that is a transformational change that makes them more likely to do business here or live here," Johnston said."Homelessness is absolutely an investment in the city's economic growth."
In late April, the Federal Emergency Management Agency (FEMA) rescinded $24 million that the City of Denver wanted reimbursed after using it to house, transport and care for migrants during the past two years. Johnston said on Thursday that while "those dollars clearly affect the budget" and would be nice to get back, the city's shortfall is much larger than $24 million.
"That would be wonderful to get that back, and that is still a one-time investment," he said. "That would help us solve a little bit of short-term costs in 2025. It does not solve the structural gap that we're seeing."
The city joined Pima County in southern Arizona and the City of Chicago in a lawsuit that seeks to claw that $24 million back. The lawsuit claims that President Donald Trump illegally directed FEMA to rescind those funds as political retaliation for helping immigrants. However, Johnston said that Denver is hurt more by the way Trump is affecting the economy.
"That most profound thing that the federal government is doing that is driving a change for our city is the collapse of consumer confidence, the collapse of business confidence and the collapse of spending," the mayor said. "We can't control federal policy, but we can control the incentives that make it more likely for the folks in Denver to spend and invest."
"That would be wonderful to get that back, and that is still a one-time investment," he said. "That would help us solve a little bit of short-term costs in 2025. It does not solve the structural gap that we're seeing."
The city joined Pima County in southern Arizona and the City of Chicago in a lawsuit that seeks to claw that $24 million back. The lawsuit claims that President Donald Trump illegally directed FEMA to rescind those funds as political retaliation for helping immigrants. However, Johnston said that Denver is hurt more by the way Trump is affecting the economy.
"That most profound thing that the federal government is doing that is driving a change for our city is the collapse of consumer confidence, the collapse of business confidence and the collapse of spending," the mayor said. "We can't control federal policy, but we can control the incentives that make it more likely for the folks in Denver to spend and invest."
