The Denver city budget will grow only slightly in 2025, Denver Mayor Mike Johnston said Thursday as he unveiled a plan with the slowest projected growth rate in more than a decade, outside the pandemic.
But next year’s relatively conservative spending plan — totaling $1.76 billion in the general fund — continues to prioritize Johnston’s homeless strategy, affordable housing and other signature initiatives. The belt-tightening he is proposing includes limits on hiring across most departments.
Highlights include $60 million aimed at creating or preserving 1,400 units of affordable housing next year, while also investing in more housing vouchers. Another $57.5 million would be dedicated to All In Mile High, Johnston’s main homelessness program.
That initiative runs on a network of transitional housing in converted hotels and temporary micro-communities. The city is now over the hump of having made big, up-front investments in properties and facilities, and the initiative will transition in 2025 to a more predictable program budget, Johnston said.
The mayor also proposes spending $11.9 million to grow the city’s public safety departments next year. That money is expected to net 168 new police recruits via three academy classes, along with 24 additional firefighters and 60 more sheriff’s deputies.
Under Johnston’s proposal, Denver’s general fund budget would increase by just 0.6% over the $1.75 billion the city is now projected to spend by the end of this year. A year ago, when Johnston introduced his 2024 budget — his first since taking office — he had called for $1.74 billion in general fund sending, a 3.7% increase over 2023’s level.
Next year will bring the slowest budget growth rate the city has seen in any year since 2011, with the exception of pandemic spending cuts, according to the mayor.
“I think at the highest level, we are really excited about the opportunity to talk about this year’s budget as a chance to prioritize our investments in the most important things facing our city,” the ever-upbeat Johnston said during a news conference in the City and County Building. “And how we do that in the midst of what we know will be different economic times, as we see softening of some of our sales tax revenues across the city.”
Including all city revenue streams, including some capital funds and enterprise funds like the one used for Denver International Airport, the city’s overall budget next year would be $4.4 billion.
Johnston’s proposal now goes to the City Council, which will hold budget hearings with agencies and departments in coming weeks. Council members will have a chance to request or vote on amendments before the final adoption deadline in late November.
The mayor’s budget may be putting him on a path for a second showdown with the council in as many years over financial assistance for renters. The city is on pace for a 20% increase in evictions over the record number seen in 2023.
Last year, after Johnston budgeted $12.6 million for the city’s Temporary Rental and Utility Assistance program, or TRUA, council members pressed him to increase that allocation, resulting in a compromise at $29.1 million.
Johnston’s 2025 budget calls for allocating $20 million to TRUA, with a large chunk coming from 2024 contingency funding. Another $2 million would pay for legal defense help next year for people who are being evicted.
More cops as some crime rates decrease
Next year’s public safety increase would come after Johnston earmarked $8.2 million to grow the police department by 167 officers this year. Joining Johnston at Thursday’s news conference, Denver police Chief Ron Thomas said the department was on track to meet that total by the end of 2024.
Even with recruiting a work in progress, Johnston touted progress on safety, with crime rates falling in many categories.
“Already you see almost a 30% reduction so far this year in nonfatal shootings,” he said. “We’ve seen a more than 30% reduction in auto theft so far this year and we have now seen a 95% reduction in catalytic converter thefts.”
But outside of uniformed public safety employees, the city is largely balancing its budget by cutting off hiring next year and not filling vacancies. For the first time since 2012, Denver is not budgeting to add any new full-time positions.
With budget shuffling and attrition, that would result in a reduction of about 200 positions and leave Denver with a headcount of 9,738 non-uniformed workers next year.
The decision is expected to generate $30 million in savings in a city that spends more than 65% of its general fund dollars on its workforce, according to Department of Finance officials.
The strategy of not filling vacancies mirrors how Johnston was able to soften the budget impact of the $90 million the city had planned to spend this year on services for migrants, most of them from Venezuela. Next year, the city will spend just $12.5 million for what he calls newcomer support, according to Johnston.
He said in his remarks Thursday that his administration’s pivot in approach in the spring — to providing intensive services and housing to some migrants, while ending longer shelter stays — would result in the returning of $20 million of this year’s $90 million in planned spending to the general fund.
Slowing sales tax revenue
In a city that is highly reliant on sales taxes, slowing consumer spending has an outsized impact. The city is projecting sales tax collections of around $951 million next year, according to Chief Financial Officer Nicole Doheny. That is an increase of only 1.4% over the $937 million the city is projected to bring in by the end of 2024, city officials say.
Doheny noted that beyond that dynamic, city analysts are seeing relatively weak consumer sentiment on the national level. That metric seeks to track consumers’ confidence in the economy and their willingness to spend.
Other major cities are also feeling the pinch. Los Angeles cut its budget by 2% for the 2024-2025 fiscal year, something it achieved by slashing 1,700 vacant positions, according to the Los Angeles Times. Chicago officials this week announced a hiring freeze in the city.
“Denver is not immune to these factors,” Doheny said.
The city also is nearing the bottom of the well filled by the $308 million in American Rescue Plan Act funding it received to help it recover from the impact of the COVID-19 pandemic in recent years. Just $14 million of that remains to be spent, city officials say, and all of it is allocated.
Though conservative spending was Thursday’s central theme, Johnston took a moment to highlight what could happen if city voters this fall approve his Affordable Denver dedicated housing sales tax, which would add 0.5% to the city’s effective 8.81% sales tax rate. It’s projected to raise about $100 million per year.
“If that passes, that puts us on the path to try to do about 4,000 to 5,000 households of affordable housing every year. That is the goal we would need to hit over the next 10 years to actually meet the total demand in the city,” he said. “So that would be a massive difference for us.”
Stay up-to-date with Colorado Politics by signing up for our weekly newsletter, The Spot.
Originally Published:
