“This pandemic is not only a public health crisis, it is also fueling an economic crisis the likes of which we have not seen since the Great Depression,” Hancock said at a news conference. Denver has seen steep declines in sales, lodging and other taxes since the pandemic hit Colorado two months ago, and the state is still under a safer-at-home order that has placed restrictions on businesses.
City leaders say the drop in tax revenue is affecting the fund that pays for police and fire services, as well as street maintenance. American cities, from Puyallup, Washington, to Miramar, Florida, have also furloughed employees to save money in the face of dire economic forecasts.
In April, Los Angeles Mayor Eric Garcetti released a spending plan he called “a document of our pain” that includes service cuts and furloughs for nearly 16,000 workers. Under the proposal, city employees would take 26 furlough days, the equivalent of a 10% pay cut, in the coming year.
The spending reductions in Los Angeles are likely to be a sign of what’s to come at city halls across the nation, as jobless lines grow and local treasuries see steep drops in tax revenue. Denver's planned furloughs, which do not apply to uniformed employees like firefighters, police officers and sheriff’s deputies, will save the city about $16 million. The city also is reducing travel, hiring and purchases, and it is asking departments to cut 7.5% from their budgets.
About 3,000 of Denver’s 12,000 employees are uniformed workers. “I want everyone to know that we have worked to exhaust every other tool we had before taking this step,” said Hancock, who repeated his call for lawmakers to include cities in the next federal stimulus package.
“The reality is this: If cities can’t recover, there will be no national recovery,” he said. Brendan Hanlon, the city’s chief financial officer, said he thought the fallout from the 2008-2009 Great Recession was astonishing, but the current crisis will be harder to address.
“I could have never imagined seeing the numbers that we’re seeing right now and the gravity that it means to the services that we provide to the public every day here in Denver,” he said. The city last instituted furloughs in 2011.
A survey by the National League of Cities found nearly universal agreement that cities would be hit hard by revenue shortfalls caused by the coronavirus outbreak, and in many cases furloughs and layoffs would be used to close budget gaps.