In the midst of economic uncertainty, Denver City Council’s Budget and Finance Committee has received a sobering report regarding the city's financial prospects for 2026. As preliminary discussions on budget planning commenced, city finance officials have outlined potential challenges arising from declining revenue growth and increasing expenditures. Despite these difficulties, officials maintain an optimistic outlook while acknowledging the discomfort ahead.
Financial Woes Amidst Economic Uncertainty
During a recent meeting, city officials revealed that sales and revenue taxes, which constituted over half of Denver's general revenue fund in 2024, may no longer sustain the city's natural spending growth. According to Justin Sykes, the City Budget Director, average annual revenue growth over the past decade was around 4%. However, this figure fell below historical averages in 2024 and is expected to continue its downward trend due to various economic factors.
In September 2023, projected sales and tax revenues for 2025 stood at $970.6 million. By the end of 2024, this estimate dropped significantly to $930.3 million. Contributing to this decline were unexpected costs related to Mayor Mike Johnston’s initiatives to address homelessness and the immigration crisis, totaling approximately $90 million. Additionally, four major economic shocks—tariffs, supply chain issues, financial market conditions, and federal policy changes—have exacerbated the situation.
As a result, Denver's general fund balance decreased markedly from $391 million in 2022 to $239 million in 2024. Although similar budget shortfalls have been reported in other cities like Chicago and Los Angeles, specific figures for Denver remain elusive. Sykes emphasized the ongoing analysis of financial data, noting the fluidity of current economic conditions.
Looking ahead, finance officials recommend a flat or reduced starting point for the 2026 budget compared to 2025 levels. This approach involves reapplying budget cuts made in 2025, affecting both personnel and services. Nevertheless, the city plans to allocate up to $70 million for land acquisition for a new women’s soccer stadium and seek voter approval for infrastructure bonds in November.
Mayor Johnston’s proposed budget must be submitted by September 15, with City Council required to approve it by November 10. Officials stress the importance of implementing sustainable measures rather than temporary fixes in light of prevailing trends.
From a journalistic perspective, this report underscores the delicate balancing act faced by municipal governments when addressing competing priorities amidst financial constraints. It highlights the necessity for transparent communication between elected officials and constituents during challenging economic times. The ability to adapt and make informed decisions based on evolving circumstances will ultimately determine the success of Denver's fiscal strategy moving forward.