What shrinking state and local payrolls could mean for your wallet

By: Raquel Villanueva | FOX31 Denver

DENVER (KDVR) —The city of Denver completed its layoff process for 171 workers on Tuesday, after the city already cut 665 unfilled positions on Monday.

The city says the efforts will save $100 million. But what do the layoffs mean for Denver’s economic future? A local economist gave FOX31 some insight.

The city’s personnel cuts could certainly help its economic outlook, but an expert says this could just be the beginning of tough times.

“If this trend continues, then it is not a very good situation. I think we will have a pretty severe impact of recession maybe by the end of this year or maybe even next year,” said Kishore Kulkarni, a distinguished professor of economics at MSU Denver.

With Denver’s budget $200 million short for next year before this week’s $100 million in cuts and Colorado’s budget nearly a billion dollars short for this year, Kulkarni said this could mean turbulent times ahead.

“I wish I could say there is a positive, but there isn’t any. This is all directing in the same direction that this is going to hurt as far as the recession is concerned, as far as unemployment is concerned, the spending by the consumers are concerned and house prices are concerned. So I think this is a trend which can get worse,” Kulkarni said. “Our tax revenue growth is down. People are probably shying away from staying downtown; they are going into the suburbs. That doesn’t do much for the city’s revenue either. So there is a smaller revenue growth, I agree, but then there is, or was for the last three, four, five years, a much higher expenditure on the city government’s part, too.”

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