In a boom town full of growth industries, one of the most consistent job producers in Denver for five years running has been city government.
After a post-recession hiring blitz, Denver government offices have outgrown several city-owned office buildings, including downtown’s massive and modern Wellington E. Webb municipal building.
That expansion, which includes plans for more hiring next year, could end up increasing the municipal workforce by nearly one-fifth between 2012 and 2018, a Denver Post review has found.
As city finance officials have inked multiyear deals for private office space fronting Civic Center, the number of budgeted positions this year reached the equivalent of 12,445 full-time positions, including some temporary workers. Mayor Michael Hancock’s proposed $2 billion operating budget for 2018 would increase that total to 12,918.
Denver’s hiring spree has been no secret, with each year’s budget adding hundreds of new positions. Some have addressed crises, including a dangerous shortage of jail deputies. Others provided staff for new buildings the city has opened. Many more positions have been sprinkled across departments citywide, from core operations to self-sustaining entities such as Denver International Airport.
Hancock and his financial advisers say the hiring, while robust, has been targeted to respond to a multitude of needs in a fast-growing city that has increased its population by nearly a quarter in a decade.
They maintain that the spending on payroll — roughly $1.1 billion last year — is sustainable. Even so, chief financial officer Brendan Hanlon says the next recession still may require austerity because the city relies on sales and use taxes, which fluctuate with the economy, to pay for about half its core operations. (Property taxes cover 9 percent.)
But some outside observers question what they see as largesse.
“Denver just seems to be a place that, whenever some new thing comes along, (officials) never seem to say: ‘If you want to do B, let’s do less of A to pay for it,’ ” said Mike Krause, the director of the Local Colorado Project at the libertarian-leaning Independence Institute. “You can only do it so long before you have to pay the piper.”
Such disagreements often hinge on whether city leaders, in new ventures such as a recent 10-year, $150 million affordable-housing funding initiative, are straying beyond the proper role of city government.
Hancock and the council may have drawn the ire of conservatives — who are in short supply in liberal Denver — as they also have looked to expand the city’s involvement in transit, social problems and other issues. But they have been pushed to take action by a range of urban activists.
Initially, with voters’ approval, the city hiring surge reflected a reversal of a few years of belt-tightening during the Great Recession and its lingering aftermath, including employee furloughs.
And then, as Denver’s economy took off and a population boom took hold, officials continued hiring.
Starting last year, the city has looked across the street from the Webb building for more space. It has signed two multiyear, market-rate subleases, valued at $21.7 million, that will allow use of more than 92,000 square feet on three floors of The Denver Post building well into the next decade.
City recoups recessionary cuts — and then some
A full decade after the recession’s start, Denver has done far more than recoup its downturn losses, The Post found in its review of city finance data.
Using the city’s measure of “full-time equivalent” positions — combining full- and part-time employees into one number — the city this year has 1,681 more authorized city jobs than in 2007. Under Hancock’s 2018 budget proposal, that nearly 11 percent total increase would grow to 15 percent.
That growth steepens when you narrow the frame to city job growth only since the most recent low point in city employment, when Denver had the equivalent of 10,813 full-time positions in 2012 amid a recessionary dip in sales tax revenue. The projected workforce growth from that year through 2018 would amount to 19.5 percent.
Total payroll has grown even faster. The city spent $972.5 million last year on salaries, benefits and other payroll expenses. Adjusting for inflation, that’s a 25 percent increase since 2007.
Those expenses provided by the city’s finance department don’t include DIA, which has a separate finance staff and wasn’t able to provide actual spending data by The Post’s deadline. This year, DIA budgeted $124 million for airport personnel expenses.
The hiring hasn’t bankrupted the city. Far from it — in recent years, city officials have transferred tens of millions of dollars a year in excess reserves to transportation projects and other one-time uses. Denver still has adhered to a city target of setting aside the equivalent of 15 percent of general-fund spending in reserves.
“That’s a nice position to be in,” Councilman Kevin Flynn, who represents southwest Denver, said during a recent budget hearing.
But does all the hiring threaten to break the budget?
Hanlon, a longtime Denver budget director before Hancock elevated him to chief financial officer last year, says his staff’s budgeting is careful.
All three major ratings agencies generally agree, giving Denver pristine AAA budget ratings in 2015 for its general-obligation debt, based on appraisals of the city’s financial management.
“I believe that we have the revenue profile to sustain the FTEs that we have added,” Hanlon said, using the abbreviation for full time-equivalent positions. “I believe also that we are not frivolously adding employees.
“We’re adding employees that serve a purpose — you know, we’re opening fire stations. We’re staffing more police officers. We’re staffing up the Sheriff Department,” along with the city’s permit-review office, which has been inundated by developers’ plans. “I believe that these are demand-driven responses. Now if we see changes in that demand, we have to consider whether we need all the FTEs on staff — but we have tools to do that.”
In the meantime, a finance spokeswoman pointed out, not all employees are in permanent jobs. This year, of the 9,068 positions budgeted in the general fund, which covers most day-to-day operations, 8 percent were deemed temporary or on-call positions.
Population boom puts pressure on services
Denver’s population has increased by 24 percent in the last decade, to a projected 709,164 this year, according to the state demography office.
That breakneck growth — along with a strong economy — has placed demands on police, the jail, the 911 call center, city streets, parks and recreation centers and other services, city officials say. The city also has designated hundreds of acres of new parks and opened three new library branches, while passenger traffic has grown quickly at the airport.
“I know there are areas where we’re bursting at the seams right now,” council President Albus Brooks said. “The public’s concern is whether we’re addressing our needs.”
Hanlon cited one comparison to show city employment growth may not be as large as it seems: For every 10,000 residents in 2007, the city had 130.4 general-fund positions. Next year, based on projected population growth, the city would have just 119.6 jobs per 10,000 residents.
In Hancock’s second year in office in 2012, he and the council faced a starkly different budget climate. Over the previous five years, city officials had cut a combined $540 million from annual budgets.
So they put a question to voters, asking them to opt the city out of a remaining state-mandated spending cap formula, under the state Taxpayer’s Bill of Rights, that had handcuffed those budgets. The promise was to hire 100 more police officers, restore cut library hours and reverse several other reductions.
Voters agreed, with nearly 74 percent supporting that year’s Measure 2A. Its passage unlocked about $42 million a year in property tax proceeds the city previously hadn’t been allowed to keep.
Taxpayers pay tab for expansion
Since then, Hanlon said, that extra annual revenue from 2A has been diminished by a booming real estate market that has resulted in property valuation increases across the city, increasing tax collections. The measure did impose a replacement revenue growth cap that keeps the city from collecting taxes on all of the growth in value.
The growth in local government is worrisome to some property owners, who haven’t seen tax rates go up but still pay more because of the valuation increases.
“I just think someone should be raising the larger philosophical question: Should the city be adding resources and people, or should it be more focused on sticking to its primary functions of supplying safety, security, roads, garbage pickup and so on?” said Z.J. Czupor, who lives in southeast Denver.
But Brooks, who joined the council in 2011, said the turnaround from the recessionary years should be celebrated.
“We’re living in the land of milk and honey right now in Denver, and it feels great,” he said, giving credit to the city’s CFO. “We work very well with Brendan Hanlon. I think he’s conservative, and yet he’s innovative and (willing to take) some risks. I think we have a pretty good balance.”