DENVER - Today, after carefully evaluating the negative impacts of the federal government’s budget-busting bill, H.R.1, Governor Polis is calling the General Assembly back into session to address the significant impact this has on Colorado’s budget. The special session will begin on August 21, 2025 at 10:00 AM. Governor Polis was joined by Office of State Planning and Budgeting Director Mark Ferrandino.
“Unlike Congress, which has made the federal deficit and debt worse, Colorado actually has to balance our budget. We have a responsibility to deliver a balanced budget to Coloradans, so after careful consideration, I am calling the General Assembly to reconvene to find the best possible solution to the havoc H.R.1 has wreaked on Colorado’s budget. This isn’t about rhetoric; this is about hard numbers and balancing our budget. We are committed to working alongside the General Assembly to address the unexpected and immediate revenue shortage caused by the passage of H.R.1,” said Governor Polis.
“The simple reality is that H.R.1 immediately cuts Colorado’s revenue, making it so that our budget is no longer balanced and that our TABOR refund has been taken away for this fiscal year. All options are on the table, and we look forward to working with the General Assembly to find the best possible solution in these truly challenging circumstances caused by the federal reconciliation bill,” said Office of State Planning and Budgeting Director Mark Ferrandino.
The call takes a carefully balanced approach to addressing the major impact that H.R.1 has on Colorado’s budget. This includes closing tax loopholes, cutting spending and executive action that can save money in the budget.
Some considerations include the following:
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 (Consumer Protections for Artificial Intelligence) on consumers, businesses and the state and local government.
Governor Polis also announced that the state would implement a hiring freeze to help save money and stabilize the State budget. Effective on August 27, 2025 until December 31, 2025, the Governor orders state agencies in his purview to stop posting for new job opportunities with start dates in 2025. This will not include positions that are fully funded through TABOR-exempt funding sources. The Governor’s Office will issue a directive outlining which positions will be exempt from this hiring freeze, including those necessary to ensure public safety and the safe and continuous operations of facilities in which people are in the care and custody of the State, and to implement changes to safety net programs required by H.R. 1.
H.R.1 will reduce state revenue by over $1.2 billion in the current year, and by roughly $700 million in Fiscal Year 2027 and Fiscal Year 2028. The loss of revenue is largely due to increased tax deductions for corporations. The bill also increases expenses by shifting costs from the federal government to the states. This will start slowly but grow significantly over time with the impacts of SNAP Match and Medicaid Provider Fee reductions. This will start at about $50-100 million in the first year, growing to nearly $1 billion in expenses by 2032. When accounting for loss in federal funds due to Medicaid and SNAP, the impact could be more than $3 billion.
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