DENVER (KOAA) — Democratic state lawmakers in Colorado gathered this week, speaking to the media and putting the blame for the Centennial State's budget shortfall solely on H.R. 1, the One Big Beautiful Bill Act passed by Congress and signed into law by President Donald Trump. The estimated shortfall is about $1.2 billion, leading to Gov. Jared Polis calling a special legislative session that starts Thursday morning.
"July 1, we had a balanced budget, and July 4, we were down $1.2 billion," Democratic Sen. Jeff Bridges, who is a member of the Joint Budget Committee, said. "And despite what you may hear from a very small number of people in the state, this is entirely because of H.R. 1. The big, terrible, beautiful, whatever bill it is, that's it. It is the only reason we are coming back."
The Tax Foundation explains how H.R. 1 impacts each state, stating that the bill reduced the federal taxable income, which is what Colorado uses to base its flat statewide income tax. Because that decreased, the revenue Colorado receives is also expected to decrease, along with the cost to implement the bill. Colorado Democrats say that is largely because of "major tax loopholes" created by the feds. Colorado is one of a handful of states that was impacted this greatly.
Colorado Congressman Republican Jeff Crank voted in favor of H.R. 1, and he believes Colorado's budget issues are tied to decisions by Democrats.
"I mean, it's just dishonest," Rep. Crank said of H.R. 1 being the sole reason for the shortfall. "They [Democrats] have doubled and tripled the budget many years over here, the last decade in the State of Colorado, just billions of dollars of waste that has gone into this system. But more importantly, I think, you know, all we did in the Big, Beautiful Bill was provide tax relief to America's families."
Speaking as a general overview, Sen. Bridges says they plan to tackle the budget three different ways: closing corporate tax "loopholes," pulling from the state's reserves and implementing cuts. However, exact cuts have yet to be worked out. As of Thursday morning, 29 bills had been posted publicly ahead of the session. The exact amount of money that could be taken out of reserves isn't completely clear.
"It does mean the elimination of TABOR refunds," Sen. Bridges explained. "Republicans in the federal government took away any TABOR refunds that folks might have, and it means that we have to balance about $725, $750 million out of our existing budget."
Rep. Crank puts the blame right back on Colorado's legislature.
"Lawmakers in Colorado have to decide, are we going to continue down this path of over-regulation... or are we going to start to look at ways to cut back and prune back the size and scope of government," Rep. Crank asked. "So overall, I think our American economy is strong, and I think the tax cuts that we provided in the One Big, Beautiful Bill will continue to help our economy grow, but in Colorado, it's a little bit of a different story."
Lawmakers will also be tackling issues surrounding Artificial Intelligence this special session.
Governor Jared Polis provided the following considerations:
Fiscal
- Changes regarding revenue shortfalls and insufficient revenue.
- Allowing the State to shift revenues by selling tax credits to certain taxpayers.
- Extending the decoupling of the qualified business income deduction and decoupling the federal Foreign-Derived Intangible Income (FDII) deduction.
- Reductions to the Home Office and Regional Home Office Rate Reduction and Sales Tax Vendor Fees.
- Update our laws around foreign tax havens to ensure companies are paying appropriate taxes in Colorado.
Health Care
- Ensuring availability of Medicaid services to eligible persons by providers banned from federal Medicaid financing as a result of H.R. 1.
- Concerning the Health Insurance Affordability Enterprise to facilitate a reduction in premium increases and avoid health insurance coverage loss.
Food Security
- Adjustments to the referred measures in HB25-1274 (Healthy School Meals for All Program) regarding the uses of the Healthy School Meals for All cash fund to include Supplemental Nutrition Assistance Program costs, and related statutory provisions.
Artificial Intelligence
- Addressing the fiscal and implementation impact of SB24-205 [leg.colorado.gov] (Consumer Protections for Artificial Intelligence) on consumers, businesses and the state and local government.
Click here to read more about what Democratic state lawmakers had to say about the special session and H.R. 1.
Click here to read more about what Senate Republicans have to say about the special session and H.R. 1.
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