Denver officials outline $200 million 2026 budget gap, detail layoff process and employee supports

Denver Mayor and the City Council were briefed Tuesday on a projected gap of roughly $200 million between baseline 2026 expenditures and the city’s projected general fund revenues, city budget and human resources officials said, and on the personnel processes the administration will use if layoffs are required.

Justin Sykes, the city’s Budget and Management director, told council members that sales and use taxes — the largest single source of general fund revenue — have slowed, that June 2025 sales activity fell about 0.4% from June 2024, and that a modeled increase in tariffs could reduce Denver’s 2026 sales-and-use-tax revenue by roughly $25,000,000. Sykes said the administration now expects essentially flat general fund growth in 2025 and lower revenue in 2026.

The mayor framed the shortfall as a human problem for city employees. “This has been the hardest leadership task I probably ever had to undertake over the last 4 months,” the mayor said, adding that cabinet members are trying to protect staff as the city adjusts to lower revenues.

Why it matters: Denver’s fiscal rules call for a 15% general fund reserve target; as of the end of 2024 the city reported roughly $239,000,000 in general fund reserves. City staff said a continued gap of the size presented would exhaust a large portion of those reserves and that, under current assumptions and proposed short-term steps, the…