Economic uncertainty is clouding Denver's fiscal 2026 budget projections due to the potential impact of tariffs, although revenue is expected to be flat.
In a budget preview this week, city Budget Director Justin Sykes pointed to lower sales tax collections, which account for 56% of general fund revenue, and "very serious economic headwinds."
"What we know right now is that this high level of economic uncertainty and volatility makes it really, really challenging to pinpoint a specific revenue estimate, not only for the remainder of this year, but also for 2026," he told the city council's Budget and Policy Committee on Monday.
Essentially flat revenue for fiscal 2026, which begins Jan. 1, means that "without any decision points, or even without any budget expansions, we likely would need to make some reductions in order to accommodate just that natural growth in the city's budget," Sykes said.
Denver is also grappling with rescinded federal grants, including one meant to help fund shelter for migrants sent to the city as part of Texas Gov. Greg Abbott's transport program to six "sanctuary cities." Sykes said the city received about $8 million from the $32 million grant before it was terminated by the Trump administration.
Mayor Mike Johnston, who was one of four big-city mayors testifying in Congress in March, said Denver's
Sykes said the majority of the $100 million to $200 million in grants the city receives annually comes from the federal government, adding that Denver "does not have the capacity, if all of that federal funding were to go away, to backfill it."
The financial uncertainty comes as triple-A-rated Denver is considering asking voters to approve
"I don't know how this is going to fare on the ballot in November, because people are really worried and scared about the tariffs," Council Member Stacie Gilmore said.
Voters passed a 10-year, $937 million Elevate Denver bond program in 2017 and a $260 million Rise Denver bond program in 2021. Ahead of a
