"We're at this point because at this time we're losing city tax revenue," Johnston said. "Tariffs and other policies are changing how people are spending money. Normally we have 5 percent growth in sales tax revenue. This year was 0 percent; that's what caused this problem."
Unlike city budget cuts made in February 2024 to handle the influx of migrants, the city won't be cutting DMV or Parks & Recreation services, according to Johnston. He also stressed that no one lost their job in the Denver police, fire or sheriff departments. Trash pickup and permitting times will be unaffected, too, he said.
"You were probably assuming or worried, 'are you going to shut rec centers, are you going to shut parks, are you going to close libraries?' The answer is no," Johnston said. "We are not reducing any officers on the street. We are not changing our commitment to permitting times and on swift resolution of permitting requests."
The mayor promised that if "tax revenue and what we spend even out, then we can assure that we won't need more layoffs in the upcoming year."
Johnston reiterated that the August 19 layoffs were necessary because 70 percent of the general fund budget was for personnel. According to the mayor's office, 171 people were laid off on Tuesday, but that number was changed to 169 on Wednesday after two employees targeted for layoffs chose to resign or retire instead. The city also eliminated 666 vacant positions and transferred 92 positions off the general fund.
"I never wanted this part of the job, but the hard thing to do is to do the honest and courageous thing in this moment," Johnston said. "Most folks I talk to know that if they have a spouse that loses a job or they're making less money, they have to change their behaviors and how much they spend. This is us doing the same thing."
Laid off employees will receive a month of paid administrative leave, two to eight weeks of severance pay and sixty days of healthcare coverage. According to the mayor's office, the city won't know how much those severance packages cost for a few more weeks. Johnston said on Tuesday that the layoffs were timed to keep costs from running into 2026 and to use the savings from layoffs to pay for severance packages.
"We wouldn't want to lay someone off in October or November during the holidays, anyways, but if we did and then gave them three months's severance, we'd be paying them in January and February," Johnston explained. "All the dollars that we saved in the 2025 budget from the layoffs, we were able to transition into severance and insurance coverage."
Saving More Money
The layoffs will save the city about $100 million, according to the mayors office. He plans to save another $100 million by making spending cuts, mostly to city contracts and projects, in 2026."This $100 million came from personnel," Johnston explained. "But the other $100 million we're going to save by cutting projects, contracts and other things that we spend on are that aren't people."
The mayor's office will push cuts to city homelessness services, which accounted for $155 million during Johnston's first year in office from 2023-2024 and then $58 million the following year. The city expects to pay around $58 million annually in reoccurring costs, largely coming from hotel shelter purchases and service contracts.
"We will certainly need to reduce what we were spending there," Johnston said. "Importantly, the investments we made in homelessness are working, not just working, but working at a historic level."
Defending his homelessness efforts, Johnston argued that his administration has cut street homelessness nearly in half during his first two years in office, although criticism surrounds the claim, with nonprofits and advocates worried that deeper issues aren't being addressed and conservative lawmakers in neighboring Aurora calling the housing-first approach irresponsible and unsustainable.
Hiring is frozen through 2026, Johnston said, unless an employee leaves while the department has a balanced budget and can afford to bring on a replacement. The mayor warned that if departments spend beyond what's already allocated for their budgets this fiscal year, they won't get help from the city to make up losses.
"If they have any overages in 2026, they will have to cover their own overages because often they rely on contingency funds, which is the city's sort of reserve account," he added.
Is Now the Time for Public Investment?
Johnston said he'll turn to "public investment" to combat the decline in sales tax revenue that he blames for layoffs. In particular, the mayor believes will come from the Denver Downtown Development Authority, which funds public improvement around Union Station with property tax revenue. He also hopes that the Vibrant Denver bond package, an upcoming set of ballot measures, will pass across the board to bring $800 million in public infrastructure improvements."The revenue growth, really, is a whole series of strategies," Johnston said. "When the rest of the economy is tightening, [that is] when you want to make public investments. That was the idea behind [federal COVID relief] and other stimulus packages: drive public investments when the markets are nervous."
Federal funding cuts could make the situation worse, Johnston warned. The city is suing the Trump administration in four separate cases over withheld funding, largely because Denver has been deemed a "sanctuary city" for not working with Immigration and Customs Enforcement (ICE). A federal judge has released federal money for transportation and counterterrorism, but the Trump administration could try to block more funds.
The city is "watching closely" for more federal funding losses, Johnston said, and he expects "what those [federal cuts] are most likely to do at this point is affect services rather than impact the city budget." These federally funded services generally "pass through" the city, he explained, like housing vouchers and food stamps. However, some employees in Denver could lose their jobs too.
"We do have positions in the city that are federal-grant funded. If those federal grants go away, we do not have a plan to back fill those," he said. "We would not have the city go back and take a new round of cuts to balance those."
The city is "watching closely" for more federal funding losses, Johnston said, and he expects "what those [federal cuts] are most likely to do at this point is affect services rather than impact the city budget." These federally funded services generally "pass through" the city, he explained, like housing vouchers and food stamps. However, some employees in Denver could lose their jobs too.
"We do have positions in the city that are federal-grant funded. If those federal grants go away, we do not have a plan to back fill those," he said. "We would not have the city go back and take a new round of cuts to balance those."
Accusations of Retaliation
Johnston addressed accusations that some employees had been laid off as retaliation, saying the claims "are irresponsible and factually false."
Last year, the mayor's office was sued by Jessica Calderon, a staffer with the Mayor's Office of Social Equity and Innovation. Calderon says she was confronted about connections to Johnston's opponents the 2023 mayoral race and was unfairly denied a promotion. Calderon was among those laid off this week.
District 11 City Councilwoman Stacie Gilmore complained at a council meeting on Monday, August 18, that her husband Scott Gilmore, a longtime Parks & Rec executive, was laid off. She accused the mayor of firing him because of Scott's "sassy loudmouth wife" and her disagreements with Johnston.
"When we make these decisions, we don't base them on who you know or who you're married to," Johnston said. "We based them on merit, your aptitude for the role and our capacity to support it."
Last year, the mayor's office was sued by Jessica Calderon, a staffer with the Mayor's Office of Social Equity and Innovation. Calderon says she was confronted about connections to Johnston's opponents the 2023 mayoral race and was unfairly denied a promotion. Calderon was among those laid off this week.
District 11 City Councilwoman Stacie Gilmore complained at a council meeting on Monday, August 18, that her husband Scott Gilmore, a longtime Parks & Rec executive, was laid off. She accused the mayor of firing him because of Scott's "sassy loudmouth wife" and her disagreements with Johnston.
"When we make these decisions, we don't base them on who you know or who you're married to," Johnston said. "We based them on merit, your aptitude for the role and our capacity to support it."
