Colorado’s legislature is in the midst of debating and finalizing the budget for the coming 2026-27 fiscal year.
Before introducing this year’s long bill (the budget bill) and orbital bills (64 additional bills as part of the budget package), analysts told the Joint Budget Committee (JBC) that Colorado be approximately $914 million below the Taxpayer’s Bill of Rights (TABOR) revenue cap for the fiscal year, meaning no refund of overcollected tax dollars for Coloradans.
However, because of runaway structural costs within the budget (mostly from healthcare spending), Colorado’s total deficit would be approximately $1.47 billion.
Let’s see look at how the JBC intends to balance the budget.
Expected Changes
Of Colorado’s 20 principal departments, 13 are expected to receive modest General Fund haircuts from the long bill. Two departments, the Secretary of State and the Treasury, are not subsidized out of the General Fund at all, while the remaining 5 departments should see increases in General Fund funding.
However, total General Fund appropriations are expected to actually increase by 1.7 percent from last year, and the total state budget, including general, cash, and federal funds, is expected to decrease ever-so-slightly to $46.6 billion—or just under 0.2 percent less than last year’s initial appropriations.
That said, Colorado’s three largest departments, which alone account for over two-thirds of the state budget, are all receiving increased total revenue.
The Department of Healthcare Policy and Financing (Colorado’s largest and fastest-growing department) is seeing appropriations increase by 6.7 percent, K-12 Education by 3.3 percent, and Higher Education by 2.6 percent from last year.
If this is a bad year, it makes one wonder what a good year looks like.
How’d They Do It?
Some budget-balancing changes are worth noting.
For example, the JBC decided to move forward with a legally questionable recoup of TABOR refunds due to revenue losses caused by the federal One Big Beautiful Bill.
In a similar (ethically if not legally questionable) vein, the JBC plans to raid the unclaimed property fund, too.
It is also expected that the statutory reserve requirement will be lowered from 15 percent to 13 percent, raising concerns about the depletion of reserves outside a recession.
Unsurprisingly, expenditures for Cover All Coloradans (healthcare for undocumented children and pregnant women) are trending significantly higher (more than $151 million) than originally expected.
In turn, the state is capping enrollment and limiting certain services to curb the growth.
Last year, voters were told that all one-time cash transfers to the General Fund and small budget trims could not happen again, or there would be dire consequences.
However, the state is again making cash fund transfers to the General Fund.
Ultimately, voters this year are being given the same sky-is-falling rhetoric they were last year, which ultimately makes it harder to take progressives’ claims of a budget “crisis” seriously.
Coloradans do not need to approve increasing taxes by billions of dollars and forgo TABOR refunds forever to save the budget.
Rather, the legislature needs to stop its insatiable spending and incessant catastrophizing.
