Denver projects a $250 million budget deficit

“The economic downturn and volatility brought on by President Trump is a major challenge facing Denver,” Mayor Mike Johnston said.

Bloomberg News

Denver’s mayor has announced initial steps to respond to projected budget gaps of $50 million this fiscal year and $200 million in fiscal 2026, including unpaid employee furloughs and a hiring freeze.

A financial outlook released on Thursday pointed to flattening revenue and growing costs for the shortfall.

“The economic downturn and volatility brought on by President Trump is a major challenge facing Denver,” Mayor Mike Johnston said in a statement. “This uncertainty, coupled with declining revenues and significant growth in the cost of city government over the past decade, require us to immediately address the city’s structural budget deficit while protecting essential services and positioning Denver for economic growth in 2026 and beyond.”

Furlough days, which exclude public safety personnel, will take effect June 1 through the end of the year, while an immediate hiring freeze, excluding uniform and airport workers, will last until at least Sept. 15. Spending reductions next year could include program reductions, consolidations, and employee layoffs, according to the statement.

Infrastructure projects aimed at boosting the economy will not be impacted, it added. They include a plan approved by the city council earlier this month to spend up to $70 million from the capital improvement fund on land acquisition and infrastructure for a National Women’s Soccer League stadium.

The Denver City Council issued a statement acknowledging “the difficult financial conditions facing the city and the need for immediate action.”

“The council looks forward to providing input on shared priorities that reflect Denver residents’ needs and reviewing the mayor’s proposed budget this fall,” the statement said.

Triple-A-rated Denver is considering asking voters to approve an $800 million general obligation bond program in November.

In April, city officials flagged a tight budget for fiscal 2026, which begins Oct. 1, due to economic uncertainty and the loss of federal grant funding.

On May 16, Denver, along with Chicago and Arizona’s Pima County, sued U.S. Department of Homeland Security officials in federal court in Chicago seeking to stop a grant funding freeze for a “shelter and services program” to reimburse migrant-related costs.

Since 2022, Texas Gov. Greg Abbott transported thousands of migrants to six “sanctuary cities,” including Denver. Johnston, who was one of four big-city mayors testifying in Congress in March, pegged Denver’s migrant costs at $79 million over the last two and a half years.

The city and other local governments filed a lawsuit against federal agencies last week in U.S. District Court in Seattle, challenging the president’s power to impose conditions on various grants.

In the complaint, Denver cited hundreds of millions of dollars in Federal Aviation Administration grant funding, $130 million in Federal Highway Administration grants, and approximately $167 million in Federal Transit Administration grants “to provide critical transit services and improvements.”