Mayor Mike Johnston shared his proposed 2026 budget with the Denver City Council, employees and the media on Monday.
The new budget would close next year’s projected $200 million deficit.
The city does not expect to continue running a deficit and would not spend any more money from its savings, though it would not fully replenish its reserves either.
“We have now closed a $200 million budget gap while making sure we're both protecting the core public services,” Johnston told city employees at an internal meeting on Monday morning. The proposal will go before the Denver City Council and could be amended in the coming weeks.
In total, the city’s general fund spending would shrink to $1.66 billion, a reduction of about 5.8 percent, or about $102 million, compared to the 2025 budget. But the mayor is counting $200 million in savings because he’s comparing the spending plan to what could have happened without changes.
Meanwhile, the mayor pledged to protect core customer services: maintaining hours at all recreation centers and pools, keeping libraries open, picking up trash and more. He promised no impacts to development project review time, street sweeping and winter plowing.
If the budget meets expectations, 2026 would represent the city’s first balanced budget since 2022.
The budget crisis has been developing for well over a year. It is a result of a weakening economy and years of growing city spending, Johnston has said. The city expects that sales tax revenues will decline next year, a sharp change for a city that has seen consistent budget growth since the Great Recession.
The city has little financial cushion to absorb the shock: Denver has had budget deficits and reduced its savings since 2023, starting just before Johnston took office. But it can’t afford to deplete its reserves much further, city officials said. It currently has a rainy-day fund equal to just 10 percent of its general fund spending — far below the recommended 15 percent. Reserves would grow to 11 percent next year under Johnston’s proposal.
Johnston said the city has already saved an estimated $118 million by laying off around 170 workers and eliminating nearly 1,000 vacant or eliminated jobs in recent months.
The city would cut another $77 million in contracts, services and supplies, while making other changes to add $5.7 million in revenue.
“A lot of these are very small cuts in a lot of departments,” he said.
Under Johnston’s proposal, the city would cut a variety of spending, including:
- $10 million from technology contracts.
- $8 million by cutting a credit card payment system.
- $11 million by closing shelters that it has run at two leased hotels. The city would continue to operate the hotel shelters it owns.
- $4.6 million by shutting down two library branches earlier than planned ahead of renovations.
The city would also save an as-yet unknown amount of money by:
- Eliminating the AID Center, which offered resources to people experiencing homelessness. The city says similar services will continue elsewhere.
- Reducing the number of security entrances at city buildings.
- Reducing marketing campaigns, including those for marijuana prevention, the emerald ash borer and job recruitment.
- Changing from full letters to postcards for property tax notifications.
- Improving the elevator inspection and repair process.
The city has also benefited from a drop in the number of immigrants arriving in Denver, which has allowed a dramatic decrease in city spending on shelter and services.
City workers would not see cuts to their benefits. But they would not be eligible for raises in 2026, unless revenue exceeds expectations
“With this budget we are planning for no layoffs and no furloughs in 2026, as long as our revenue projection … holds,” Johnston said.
Other changes
Funding for the Department of Housing Stability funding will remain flat. Meanwhile, the city would reduce funding for rent and utility assistance, refocusing it on people most at risk of homelessness.
Public safety funding would stay flat. The public safety budget would absorb pay increases from union contracts that previously were paid for through other funds. Numerous departments were merged or consolidated.
For example, Arts and Venues is set to absorb the Office of Special Events. Human Rights and Community Partnership would be consolidated from nine units to four. The city’s Economic Development Office would turn five departments into three.
Meanwhile, Johnston said the city is “digitizing and modernizing services.” He gave the example of the city’s Sunny chatbot, which can reduce 311 loads by automatically answering residents’ questions.
The city is also looking for places to make more money. That includes increased photo enforcement in traffic control and speeding, keeping the city safer and increasing revenue, Johnston said.
The city would also offer greenhouse space in parks for rent.
The city would not add taxes or fees to generate more revenue, a strategy other cities have tried.
Johnston’s shrinking budget
The city’s budget has grown quickly since the Great Recession, especially after the COVID-19 pandemic hit and Denver was flush with emergency federal funding, with general fund revenues leaping by 12 percent in 2021.
That growth slowed as Johnston took office and the economy leveled out. By 2025, general fund revenues were expected to grow just 1.1 percent — and it’s now projected to shrink in 2026. That’s mostly a function of slowing sales, and shrinking sales taxes, at local businesses.
At the same time, Johnston said, government spending has kept growing, and the city is also facing the threat of a more dramatic economic downturn and further cuts to state and federal funds. Practically every agency and office has seen its budget grow significantly over the last decade, and the city also spent hundreds of millions more on homelessness and immigration responses under Johnston.
Johnston framed his 2026 budget as an inflection point for the city, pushing a message of fiscal responsibility.
“You really do have to reduce the size of city government. You have to deliver a government that works better and costs less. And I think that is not a bad word in government. That should be part of what our job is,” he said in an earlier interview.
Even as he makes cuts, Johnston has asked voters to authorize about $950 million in long-term debt for a slate of city projects known as Vibrant Denver. He has framed it as a kind of stimulus package that will keep Denver economically viable.
Meanwhile, the mayor’s critics have blamed him for irresponsible budgeting in recent years.
Starting in 2022, the city began drawing down from its emergency savings, though it wasn’t until Johnston’s first year in office, 2023, that the general fund reserve dipped below the recommended cushion: 15 percent of spending.
The savings fell even further in 2024, and would be just 11 percent next year under the proposed budget. The mayor hopes to restore reserves over the next two years, he said.
In the earlier interview, Johnston said he’s been trying to avert layoffs and cuts for 18 months. And he said that he and city executives have already made sacrifices by taking more furlough days than lower-paid workers.
“A year ago, when we were building the budget, people were upset with us because we were building one of the most conservative budgets in recent memory. You know, we actually reduced the number of city employees in this year's budget,” he told Denverite.
Other cities have faced budget cuts in the region and nationally.
“That is a national phenomenon,” Johnston said earlier, pointing to a study from the Pew Research Center that showed 20 of the biggest 25 cities are seeing financial gaps.
Budget negotiations between the council and the mayor are about to begin.
Now that the draft has been introduced, the council can amend the budget. The mayor can approve or veto those amendments. And his vetoes can be reversed by a supermajority council vote.
Here’s the timeline:
- Departments will present their proposed budgets to the council from Sept. 22 to 26.
- Council will meet on Oct. 9 to make recommendations for amendments to the mayor.
- The mayor will have until Oct. 20 to present a final proposed budget to the council.
- The public will have until Oct. 27 to submit comments in writing or at a public hearing.
- The council has one last chance on Nov. 3 to propose and vote on amendments.
- The mayor must decide what amendments to accept or reject by Nov. 7.
- The council can override mayoral vetoes on Nov. 9 with a supermajority vote of at least 9 members in favor. The council must pass a final budget by this date. If it fails to, then the proposed budget, as amended by the council, becomes the official budget.
