Denver will spend about $5 million to cover the costs of laying off 169 city employees earlier this year, according to data shared with the City Council this week.
That’s nearly 5% of the $104 million in savings the city expects the layoffs to generate beginning in 2026.
Of the costs, about $1.8 million comes from severance paid to the laid-off employees. Another $1.7 million is from separation payments, which include unused vacation and sick leave. The city is also expecting to spend up to $1.4 million on unemployment insurance payments this year as laid-off employees draw on benefits.
Last May, Denver Mayor Mike Johnston announced that the city would have to lay off employees and enact a hiring freeze amid stagnating sales tax revenue. He said the city had to take those steps to plug an estimated $250 million budget hole between this year and next.
In August, city officials laid off 169 people and eliminated hundreds of vacant positions.
Councilwoman Sarah Parady announced the cost associated with those layoffs Monday during a council discussion of a proposal to use nearly $14 million in contingency fund dollars to address unplanned budget needs this year. Parady said city officials had emailed the information to the entire council.
Justin Sykes, the city’s budget director, said the layoffs were never intended to generate savings for 2025. Instead officials proposed a hiring freeze, furlough days and preservation of contingency funds to fill the estimated $50 million budget gap for 2025.
Sykes emphasized that the layoff-related costs are one-time payments, so they won’t impact future budgets.
“We did not, as the Department of Finance, offer layoffs as a 2025 savings measure,” he said.
He said his team calculated how much the city would save from the layoffs and used that amount to determine how much in severance it could afford to provide each laid-off employee. Ultimately, the city paid out amounts ranging from two weeks’ pay for those employed less than a year to eight weeks’ pay for employees with 15 years of service or more.
“We wanted to maximize the amount of severance that could be paid to those employees,” he said.
As part of the contingency proposal, the council discussed an $11 million request from the Denver Police Department for overtime and separation payouts. That’s significantly higher than other departments’ requests, all of which were under $1.5 million. DPD said the overtime costs, which accounted for $8 million of its request, were driven by an increase in protests this year and added patrols for downtown.
A majority of the council approved the contingency requests on first reading, with only Parady and Councilwomen Serena Gonzales-Gutierrez, Stacie Gilmore and Shontel Lewis voting no.
The city’s budget had $34 million in contingency available for 2025, leaving about $20.6 million to go into the city’s diminished rainy day fund if the transfer proposal wins final approval next week.
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