Denver Mayor John Hickenlooper’s annual State of the City report contained plenty for residents to take pride in, but huge challenges still loom for the city.
In the past 18 months, Denver has had to make do with $160 million less. Now, city departments are trying to budget for another $100 million budget shortfall.
City workers likely will face another year of belt-tightening, and it will be rough. Already 7 percent smaller than when Hickenlooper took office, Denver’s public work force must serve a population that has grown by nearly 60,000 since then.
Given the budget problems, Hickenlooper couldn’t exactly call for any grand new initiatives in his Tuesday speech, so he resorted to committing to see through previous projects and plans. That’s appropriate.
But what if Denver’s tax revenues continue to lag for years to come?
The Great Recession taught consumers to be more frugal. They are spending less and saving more. And while that is good for the overall financial health of those consumers, it presents a challenge for a city that gets half its revenue from sales taxes, says Claude Pumilia, Denver’s chief financial officer.
What’s more, over the last 50 years, cities across the nation have seen a steady shift in how wealth is created. In 1960, the economy was supported by about 60 percent production of goods and 40 percent by provided services.
That dynamic has flipped, but services are taxed far less often, if at all.
Looking to the future, Denver will have to rethink its revenue stream, Pumilia cautions. But Hickenlooper is loath to suggest any new taxes or fees in a down economy.
We agree with the mayor on that point. But we continue to urge him to start the process now of re-booting Denver’s long-term revenue sources.
That will require reaching out to the region, as Pumilia notes. For example, should the city share more government functions with suburban cities to be more efficient? What about a regional discussion on taxing services?
Those conversations, we realize, are difficult as the mayor runs for governor, but part of Hickenlooper’s success to date has been his efforts to reach out to metro area cities.
In his speech, the mayor pointed out accomplishments in recent years that have made Denver a better city, from finally getting a modern jail and justice center, to helping families with preschool costs and with college scholarships.
But some of those successes won’t help pay future bills. For example, the targeted taxes that are building new libraries and cultural facilities won’t help the city staff the buildings once they’re open.
Hickenlooper has bridged budget gaps with a creative mix of one-time fixes and actual reductions in city spending that carry forward. But more work remains to be done on some long-term structural problems with the city’s budget.
