Like most major U.S. cities, Denver has experienced financial ups and downs over the past decade.

Mayor Mike Johnston announced last week that the city is facing a $200 million budget deficit in 2026 and will need to enact furloughs that started Sunday, hiring freezes, restructure contracts and reel in discretionary spending.

But this isn’t the first time Denver has faced a major financial shortfall.

Over the past decade, Denver has struggled with multiple budget shortfalls, and despite moments of financial discipline, times of economic strain seem to trigger the return of furloughs, hiring freezes and cuts to discretionary spending.

Between 2015 and 2025, the city’s budget has ranged from modest surpluses to multimillion-dollar deficits.

According to city documents, in 2018 and 2019, Denver’s expenses outpace it revenues.

In 2018, the city’s expenditures were $1.37 billion compared to revenues of only $1.34 billion, according to Laura Swartz, spokesperson for the Denver Department of Finance.

Expenditures for 2019 were $1.44 billion with revenues coming in at $1.4 billion.

However, five months after the start of the COVID-19 pandemic in 2020, Denver’s revenue was projected to decline by $220 million, wrote then-Mayor Michael Hancock in a letter to the city.

He called the deficit “the worst drop in city revenue since 1933 and nearly equal to the entire 2020 operating budgets of Parks and Recreation, Community Planning and Development, Denver Public Library, Trash Collection, Department of Public Health and Environment, Human Rights and Community Partnerships, and the Office of Climate Action, Sustainability and Resiliency combined.” 

According to Hancock’s letter, which was included in the city’s 2021 spending plan, Denver pulled $94 million from its reserves and required career service employees and appointees to take eight furlough days, resulting in a savings of $16 million.

Cost savings generated internally by city agencies, combined with state and federal funds, helped close the $190 million budget gap.

Denver again faced a general fund deficit in 2024, this time to the tune of $108 million. The city’s financial woes were attributed to economic uncertainties, a $40 million shortfall in tax revenue.

City expenditures on homelessness, and an influx of undocumented immigrants spilling over from the nation’s southern border also strained city finances.

Denver, which is only six months into its 2025 budget, now faces a $50 million revenue shortfall and a projected $200 million gap for 2026. The City Council has until Sept. 15 to remedy the shortfalls – that’s when the mayor’s 2026 budget proposal is due to be released.

Effective June 1, the city, once again, turned to a tiered furlough system, a hiring freeze, restructured contracts, and limited discretionary spending.

Mandatory furloughs, announced last week, require all 15,000 city employees to take two to seven days off without pay in 2025. The move is expected to save the city an estimated $10 million. 

Even Denver International Airport employees are required to take part in the furloughs “in solidarity” with city employees. 

“While our budget is not tied to the city’s general fund, we have historically stood in solidarity with our City and County of Denver Colleagues downtown when belts need to be tightened,” DIA CEO Phil Washington wrote in an email to airport employees.

As an enterprise fund, revenue generated by the airport, be it from airline fees or concessions, as well as any cost savings, must remain with and be reinvested in the airport. The use of airport revenue for purposes other than airport capital or operating costs could be considered “revenue diversion” and is prohibited by federal law.

Closing the $200 million gap for 2026 will be challenging, according to experts.

Despite the projected shortfall, Johnston has maintained that, while the city faces flat revenue growth, investments in projects that create and drive new money are needed, as well as immediate steps to “restructure city government to live within its means.”

Such spending, he argued, must continue.

“That means, when we talk about downtown reinvestment, National Western Center, Women’s Soccer League, Vibrant Denver — not a single dollar that comes from the general (fund),” Johnston said. “It does not displace an employee. It does not cut a program — those are capital dollars for capital investments, and they drive long-term revenue that does become the general fund.”

Johnston said the late 1980s were tough on Denver, particularly after the 1987 stock market crash called “Black Monday.”

While it probably “seemed like a terrible time to drive investment in the city,” Johnston said then-Mayor Frederico Peña “went forward with building the convention center,” which turned out to be a “massive driver” (of revenue).

He also referenced the city’s investments in Coors Field and Union Station.

“Those are three of our biggest revenue drivers in the city, because we had the wisdom to invest in times of challenge,” Johnston said. “So we will keep doing that – it’s the only way you grow out of the place that we are right now.”

But recent reports from Denver City Auditor Timothy O’Brien suggest that inadequate financial oversight and expense tracking are recurring themes.

A follow-up audit report, published on Jan. 2, stated that Denver International Airport is still not following procurement procedures, proper decision-making processes, or requiring contractors to submit documentation of actual costs.

Initially projected at $650 million, the airport’s Great Hall renovation project has ballooned to more than $2 billion. O’Brien has stated that the project’s lack of subcontractor oversight and misuse of project allowances could place the city at risk of even higher costs due to potential overspending on future construction. 

“This deficiency in oversight, particularly concerning multi-tiered subcontracting, limits the city’s assurance of quality construction and reasonable costs and creates a heightened risk of overpayments due to insufficient monitoring of contract compliance,” O’Brien said in a news release.

As the city looks to “invest” millions in the face of a budget crisis, private sector accounting controller and auditor Erik Clarke warns that “construction oversight, in particular, demands more attention.”

“Denver is managing billions in public infrastructure projects from the ongoing work at the Denver Airport to the potential rollout of an $800 million General Obligation Bond package,” wrote Clarke in a recent column for Colorado Politics. “Early, consistent oversight is necessary to provide the public assurance these projects are on time and within budget, that contractors are being selected fairly and impartially, and that transparency and accountability are built into the process from day one. When projects run over budget or underperform, the taxpayers ultimately foot the bill, and it diminishes trust.”

In late November, O’Brien released an audit report that revealed the city’s Department of Housing Stability (HOST), which oversees many of Denver’s homeless shelter operations, lacked financial oversight and effective monitoring systems to ensure that shelter providers remained in compliance with their contracts.

The report came even as Johnston already faced criticism over significant cost overruns for his homelessness campaign.

“Given the millions of dollars spent across several years to address homelessness, the city’s continued inability to properly monitor expenses is problematic,” O’Brien said in a news release. “Our residents expect their tax dollars to be used effectively and appropriately for such an important and ongoing issue of public concern.”

Rather than a traditional 10-year cycle, Johnston’s new bond program, valued at close to $800 million, will have an accelerated six-year bond cycle.

Denver voters can authorize general obligation bonds every four to 10 years, which are repaid through property taxes. Denver’s current bond programs are nearly complete, creating “capacity” for new projects, officials said.

While voters have been inclined to spend money on Denver’s bond issues, with projects ranging from new libraries to park improvements, they said no to a 2021 ballot initiative that called for $190 million in debt to build a new arena at the National Western Center.  

This story was updated to reflect correct city revenue and expenditure numbers for 2018 and 2019, as well as provide clarity associated with the city’s recent furlough announcement.