Denver’s tax revenue is projected to grow slightly in 2027 under a forecast that could begin to turn around years of belt-tightening, according to the city budget proposal released Thursday by Mayor Mike Johnston.
Read more Two more Colorado campgrounds close early because they have no water
The projected growth — about a 1.1% increase compared to this year — is expected to come in part from more people spending money downtown in areas like the 16th Street mall, Johnston wrote in a letter to the City Council.
“We’ve driven economic recovery through a clear, three-step plan: resolve unsheltered homelessness, bring down crime, and reinvest in downtown — an economic engine for all of Denver,” the letter says. “That strategy is paying off.”
Sales taxes, which account for more than half of the city’s annual revenue, are expected to grow by about 5% compared to 2025. On 16th Street, sales tax revenue during a one-month period was up 18% in June compared to the same month last year. But the city’s overall revenue growth is expected to be offset by decreases in property taxes and state marijuana share-back revenue.
“These numbers show that the strategies focused around downtown are working,” Johnston said during a news conference Thursday. “And they’re driving the city’s economic momentum.”
Johnston’s proposed general fund budget for 2027 is $1.68 billion, up 1% compared to 2016. The general fund is the part of the budget that covers many day-to-day expenses.
The positive turn in the city’s budget comes just over a year after the city laid off 169 people in response to budget constraints and eliminated hundreds of vacant positions. Johnston initially announced the layoffs in May 2025, saying that stagnating sales tax revenue and increasing costs made the decision unavoidable.
Read more Michelin: 3 things to watch for as the Colorado 2026 guide is revealed
Under Johnston’s proposed budget for 2027, which still must go through the council review process, the city would maintain most agencies’ budgets while also partly replenishing its reserve fund, which had slipped below the recommended minimum level in recent years.
The suggested target for that savings account is about 15% of all expenditures. Last year, the city dipped down to nearly 10%. The 2027 budget proposes bringing the reserves up to 12% of expenditures.
Johnston’s team does want to spend some of the increased income on things like parks and recreation, pedestrian infrastructure, homelessness, affordable housing, behavioral health and the Denver Sheriff and Fire departments, according to the letter.
Among the proposals, the city would spend:
- $10.4 million on a 2% merit raise for “eligible employees” in 2027. Workers with union contracts, including police, already have scheduled raises.
- $84.5 million to address homelessness, including a pilot for a new family homeless shelter.
- $51 million on new affordable housing units.
Budget hearings with the council will begin the week of Sept. 21. The council must pass a budget by Nov. 9.
Stay up-to-date with Colorado Politics by signing up for our weekly newsletter, The Spot.
Read more Hottest summer on record roasts Colorado, world, data shows
