Denver mayor warns "tough times ahead," announces furloughs, layoffs amid $50 million budget shortfall this year

Denver Mayor Mike Johnston is blaming slow revenue growth and "unsustainable" city expenses for a $50 million budget shortfall for the remainder of 2025 and a projected $200 million budget shortfall for 2026 which he called "a profound challenge." Johnston spoke to city employees Thursday morning about the dismal economic picture and then publicly announced furloughs in 2025 for most city workers, an immediate hiring freeze and potential layoffs in the future.

"The truth is this is hard and its going to be hard," said Johnston. "This is a hard conversation," he told city workers during a virtual meeting.

In speaking with city employees Thursday morning, Johnston said the city has been through some difficult times in the past five years, but that city workers "always showed up."

Johnston said "our revenues are flat" and there was zero growth in revenue last year, this year and anticipated zero growth next year.

He said the plan is to decrease costs of city operations and look at options to generate revenue with an increase in tax revenue generation.

In the news conference, Johnston said, "We have to do two things: drive revenue increases and reductions in cost. We will do both of those things."

He said he was committed to continuing to invest in projects that he believes will be revenue generators, like improving downtown Denver to attract more visitors and money, and continuing to put money into addressing homelessness. He said there are no longer encampments around downtown Denver, making it more attractive for businesses and residents. Johnston said public safety and homelessness will remain budget priorities. Although he has faced criticism for the amounts he has spent on homeless issues, Johnston said spending on homelessness and migrants, "Is not what is driving the gap we are facing right now."

Johnston announced in the earlier meeting with employees, "We will start a furlough system for 2025" for city workers with two fixed days of furloughs:

- Aug. 29, the Friday before Labor Day

- Nov. 28, the day after Thanksgiving

He said the city would "shut down" on those fixed furlough days.

Some city employees will be subject to as many as seven furlough days, depending on their salary level, "All of our senior cabinet members and myself, will take the largest number of furlough days offered to employees. That tiered balance both helps us save $10 million and helps us protect those city employees who are struggling the most."

He said the furlough days will not affect uniformed personnel in public safety positions or 911 call takers.

The hiring freeze begins Thursday and continues through Sept. 15, according to Johnston.

"We have a structural problem we have to solve," said the mayor. He said city government needed to be downsized with more services going online an cuts to agencies and consolidation was on the table.

Johnston said there will be other, additional cuts and urged suggestions and ideas from city employees on how to improve local government. He indicated layoffs of city employees are unavoidable and will likely come in 2026, but the scope of those layoffs has not been determined.

"I know this will be hard," said Johnston. "But this is a city that does hard things."