Colorado Gov. Jared Polis ordered $103 million in cuts to spending across agencies and the sweeping of $146 million from state cash accounts on Thursday to help plug the rest of the state’s large budget deficit.
He also plans to use up to $328 million from the state’s rainy-day account as the final part of a three-pronged plan to close the projected $783 million budget gap in the current fiscal year. His announcement of those actions followed a special session in which the legislature passed changes to state income tax breaks and other legislation that will raise money to help address the impact of the federal tax and spending law passed by Congress and President Donald Trump last month.
Polis’ specified cuts were big and little. But he noted that the earlier work by the legislature meant public safety and K-12 education were untouched.
He made the cuts through an executive order. They include slashing how much the state pays health care providers that serve low-income Coloradans, just months after an increase in rates had taken effect. And there are more than $12 million in canceled higher education contracts and a $5 million cut from the Colorado Department of Public Health and Environment. About $100 million in cash is being taken from a voter-approved housing fund.
Other cuts are in the low six-figures. One eliminates $131,000 that was slated for outreach as part of a program to provide health benefits for children who are undocumented immigrants.
Polis said the goal was “to minimize the damage of H.R. 1,” referring to the federal spending and tax cut bill formerly known as the “One Big Beautiful Bill Act.”
“While we succeeded in holding K-12 schools harmless, public safety harmless, the rest of the cuts are spread around,” Polis said. “Nothing is singled out.”
Polis was set to present his order to the legislature’s Joint Budget Committee, which sets state spending for the year, later Thursday. He has the authority to make midyear cuts when spending does not align with revenue projections.
The federal tax bill’s trickle-down impact on state income tax revenue created the shortfall, which amounted to more than 4.5% of the general fund budget for the fiscal year that began July 1. The cuts announced Thursday follow the end of the latest legislative session, where the Democratic majority, over six days, passed bills to cut about $150 million in tax incentives for businesses. They also authorized the sale of $100 million in tax credits that would count against collections in future years.
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The legislative cuts fell in line with the plan outlined by state leaders earlier this month: About a third of the $783 million deficit would be addressed with new revenue, another third by midyear spending cuts put in place by Polis and the final third by dipping into the state’s rainy-day fund. All told, the measures put in place will have an estimated impact of nearly $830 million, allowing for some extra cushion.
Colorado was particularly vulnerable to the federal tax changes enacted by Republicans because it uses rolling compliance with the federal tax code, meaning that the state felt the effects on state income taxes immediately.
This is a developing story and will be updated.
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