By Elliott Wenzler

Copyright denverpost

Denver Mayor Mike Johnston unveiled a budget Monday proposing the city’s largest spending cuts in over a decade — apart from decreases during the COVID-19 pandemic in 2021.

The cuts mean that most employees who remain after a recent round of layoffs won’t receive merit raises in 2026. City officials will also make about $77 million in cuts to contracts, services and supplies as part of the cost-saving efforts. Some of that will include closing two homeless shelters next year.

“Today, we are submitting a balanced budget,” Johnston said during a news conference. “This is our chance for Denver to pull together and to grow our way out.”

The city’s general fund, which generally covers day-to-day expenses, excludes things like the capital improvement budget. It would be $1.66 billion in 2026 under the proposal, down from $1.76 billion this year. That represents a near-6% cut in general fund spending, or $102 million.

The mayor’s plan was released as part of the city officials’ efforts to deal with a $200 million budget shortfall expected mostly because of flatlining city revenues in 2026. Johnston announced the anticipated revenue gap earlier this year. Denver’s budget constraints come from years of growing expenses paired with stagnating revenue growth. The city has relied on its reserves to keep the budget balanced in recent years, but that fund is now depleted as well.

Officials made up for more than half of the expected shortfall, about $118 million, by laying off 169 employees in August and eliminating 667 vacant positions.

On Monday, the city detailed the additional $77 million in cuts to contracts and other spending. As part of that, officials will close two homeless shelters — the former Comfort Inn and the Monroe Village micro-community site, together saving about $11 million, Johnston said. Other savings will come from various small changes.

The remainder of the shortfall is expected to be closed with $5.7 million in new revenue.

The plan also calls for officials to begin replenishing the city’s reserves, including adding $4 million to the rainy-day fund next year. The city’s policies recommend that it keep the savings account at about 15% of general fund expenses, but it’s now at about 10%.

Though most city employees won’t receive raises next year, the city recently agreed to salary increases for police officers and firefighters in their new union contracts.

Johnston said his budget plans for zero overall growth in revenue and added that unless Denver’s income actually decreases, there won’t be any more layoffs next year.

The City Council will have a chance to offer amendments to the mayor’s proposal in the coming weeks after diving into the details during budget hearings. Final approval is expected in November.

This is a developing story that will be updated.

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