March 23, 2026 12:20 PM UTC

Trump and Congressional Republicans Again Force Terrible Budget Decisions in Colorado

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• by: Colorado Pols

When Gov. Jared Polis called state lawmakers into a special legislative session last August, the hope was that Colorado could find a way to avoid too many devastating cuts after President Trump’s “big beautiful bullshit bill” handed the state a new $783 million budget deficit. Legislative Democrats — with no help from unserious Republicans — were able to find a way to balance the state budget until the next fiscal year, but there was a widespread belief at the time that the 2026 legislative session would require even bigger cuts because of the BBBB (also known as HR-1).

But nobody thought things would be this bad.

As we noted last week, lawmakers now have to find a way to balance the state budget (a constitutional mandate in Colorado) by cutting $1.5 billion — a half-billion dollars more than expected.

Lawmakers on the Joint Budget Committee (JBC) are knee-deep in the process of making those awful decisions. As John Frank reports for Axios Denver, Colorado is once again paying the price for the BBBB passed by Congressional Republicans last July:

Colorado’s massive budget hole isn’t the result of bad math, but rather clashing fiscal rules, rising costs and decisions lawmakers made when money was flowing.

And even after a special legislative session and executive orders in 2025 to close a separate $1 billion budget gap, the state is still struggling.

The primary driver for the current deficit projections is the One Big, Beautiful Bill Act, or H.R. 1, nonpartisan legislative experts say.

The Republican spending bill’s sweeping tax breaks for businesses and wealthy individuals are contributing to the nearly $1 billion decline in Colorado’s revenues. [Pols emphasis]

Now, Democrats are working to decouple those tax cuts from state law, but the effort won’t cover the difference and will definitely prompt budget cuts elsewhere.

Because Colorado’s tax code is linked to the federal tax code, cuts made in the BBBB created massive revenue losses in Colorado. This has led to a structural deficit where costs are rising faster than the amount of money flowing into state coffers. As Mark Ferrandino, head of the Governor’s Office of State Planning and Budgeting, told the JBC last week, “The biggest issue is what is H.R. 1 going to do to people’s tax returns.”

Republicans in Colorado continue to chirp that this problem is because Democrats spent too much money on state services, yada, yada, but this year’s budget hole would not be so massive if not for three things: 1) The BBBB, 2) TABOR, and 3) Medicaid costs. Back to Axios Denver:

TABOR is forcing the state to issue taxpayer refunds now (from the 2025 tax year), even as revenues in the current fiscal year are decreasing.

On the spending side, Medicaid and related health care costs have ballooned to half the growth in discretionary spending from fiscal year 2019 to 2025.

Much of the budget growth in the coming fiscal year will fund the program.

In addition to making massive cuts to popular programs, lawmakers also must figure out how to maintain a 15% reserve in the state budget (as of Friday, that reserve was still about $389 million short).

President Trump’s policies are also making things worse. Inflation is not under control and employment numbers aren’t looking good. The Iran War is also decimating energy markets and leading to increased fears of a nationwide recession in 2026.

Colorado would have had to make budget cuts this year in virtually any scenario (thanks, TABOR), but the BBBB took what was a structural deficit and turned it into a full-blown fiscal crisis.