Gov. Polis adjusts Colorado budget to address gap

In an executive order signed Thursday morning, Governor Jared Polis (D) made $252 million in budget adjustments, including $103 million in program cuts to help close the state’s sudden budget gap.

As a result of tax policy changes in H.R. 1 passed by Republicans in Congress and signed by President Trump on July 4, Colorado’s July ‘25-June ‘26 budget was expected to be short $783 million.

During a special legislative session that just ended Tuesday, state lawmakers passed several bills that changed state tax policy to generate about $244 million in tax revenue.

The cuts to programs was left up to Polis based on state law that gives him the power to do so by executive order.

Polis also announced using a little more than $300 million of the state’s $2.4 billion reserve fund.

“The general philosophy here, and I just want to be clear, is holding K-12 and public safety harmless, and then minimizing the damage to the state by spreading the rest of the cuts across many different areas," Polis said at a news conference announcing the cuts.

The biggest program cut will save the state almost $55 million by reverting Medicaid provider rates to last year’s reimbursement levels.

“Rolls back the provider rates that turned on July 1 to the same level as last year, so in effect, it's a freeze," Polis said.

Over the last two years, Medicaid providers have threatened to stop taking Medicaid patients because of reimbursement delays or a cut in reimbursement rates. Colorado has also expanded Medicaid to include more adults and those here without documentation.

“Medicaid is a federal program, and we administer it as a state. We contribute to the funding for the Medicaid expansion, but this is just the beginning of the damage of H.R. 1 to Medicaid," Polis said. “The state wants to do what we can to make sure people still have access to health care, and that's what we're doing today. Unlike the federal government, we have to balance our budget. So we were saying this all along, what H.R. 1 does, in a way, is it makes these cuts, and then it makes states be the bad guys in delivering the news.”

About $105 million will be diverted from Proposition 123 money. Voters passed Prop 123 in 2022 to fund affordable housing with 0.1% of the state's income tax revenue.

“That would have gone out to the land banking and equity building programs in Prop 123, but because Prop 123 said when you're below the TABOR [Taxpayer Bill of Rights] surplus, the funds can help prevent cuts to our schools and other funds. That money is going to that," Polis said.

Polis also transferred $146 million from cash funds, which are fees collected for specific programs, but can be transferred if there’s an amount above and beyond what’s needed for that program.

This is a developing story and will be updated.