{"id":17017,"date":"2025-08-08T20:08:19","date_gmt":"2025-08-09T02:08:19","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/colorado-governor-calls-special-legislative-session\/"},"modified":"2026-03-30T22:03:39","modified_gmt":"2026-03-31T04:03:39","slug":"colorado-governor-calls-special-legislative-session","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/colorado-governor-calls-special-legislative-session\/","title":{"rendered":"Colorado governor calls special legislative session"},"content":{"rendered":"

\"Gov.
Gov. Jared Polis speaks before signing a housing bill into law on Tuesday, May 13, 2025, in Denver, Colorado. (Jesse Paul, The Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>\n

Gov. Jared Polis on Wednesday ordered state lawmakers back to the Colorado Capitol on Aug. 21 for a special legislative session aimed at addressing the nearly $1 billion hole punched in the state budget by the so-called big, beautiful bill, congressional Republicans\u2019 federal tax and spending measure.<\/p>\n

In his executive order calling the special session, Polis also ordered state agencies to implement a hiring freeze through the end of the year.<\/p>\n

\u201cIf it were to be dealt with in February or March of next year, it would be very, very harsh cuts for those final three or four months of the year,\u201d the governor said of addressing the budget shortfall in an interview with The Colorado Sun. \u201cIt would be devastating to the services we offer. Much better to spread everything (around).\u201d<\/p>\n

\"The
The Colorado Capitol in Denver as seen from the Legislative Services Building across the street, which is where the legislature\u2019s Joint Budget Committee meets. The scene was photographed on Monday, Jan. 6, 2025. (Jesse Paul, The Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>

Polis also directed the General Assembly to attempt to tweak Colorado\u2019s first-in-the-nation law regulating artificial intelligence or delay its start. Right now, the statute is set to take effect in February, much to the chagrin of the tech industry, which warns the policy will stifle innovation and hit their bottom-line.<\/p>\n

The hole in this year\u2019s state budget, estimated to be between $680 million and $783 million, is caused by changes to the federal tax code made by the big, beautiful bill that reduce the tax burden on individuals and corporations.<\/p>\n

The governor\u2019s office predicts the bill will reduce the state\u2019s corporate income tax revenue by up to $950 million. Its exemption on income taxes for the first $25,000 on overtime earned by families (or $12,500 for individual tax filers) is expected to result in a hit to state coffers of up to $290 million. That\u2019s a big part of the up to $460 million in projected reductions in state individual income tax collections caused by the Republican federal tax and spending bill.<\/p>\n

Colorado\u2019s tax code is written to mostly mirror federal law, which makes it one of a handful of states particularly susceptible to the tax changes in the Republican bill. As federal tax collections fall, so will Colorado\u2019s.<\/p>\n

\"Colorado
Colorado Gov. Jared Polis points to a copy of the so-called big, beautiful bill, the Republican federal tax and spending measure, as he speaks to reporters about his decision to call a special legislative session to address a nearly $1 billion budget deficit during a news conference at the governor\u2019s mansion in downtown Denver on Wednesday, Aug. 6, 2025. (Jesse Paul, The Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>

Nonpartisan Legislative Council Staff and the Office of State Planning and Budgeting each forecast that the big, beautiful bill will reduce state tax revenues for the current fiscal year, which started July 1, by $1.2 billion.<\/p>\n

Legislative Council Staff believes there will be a slightly bigger revenue impact from individual income tax reductions and a slighter smaller impact from corporate income tax revenue reductions, but they agree on the $1.2 billion overall hit.<\/p>\n

After accounting for revenue expected to be collected by the state this year in excess of the Taxpayer\u2019s Bill of Rights cap on government growth and spending, that still leaves a gap in the $750 million range in Colorado\u2019s current, $43.9 billion spending plans. (The hole was estimated last week by the governor\u2019s office to be larger, at more like $1 billion, before it found a math error.)<\/p>\n

The governor\u2019s office now believes the budget hole is $783 million. Nonpartisan legislative staffers have consistently said it\u2019s about $680 million.<\/p>\n

The revenue hit in the current fiscal year is separate from how Medicaid and other social safety net changes made through the GOP tax and expenditure bill will affect state finances. Most of those new eligibility requirements and spending reductions won\u2019t take effect until the end of 2026, so the legislature can wait until next year, when it returns for its normal lawmaking term, to take on the effects of those provisions.<\/p>\n

To close the gap, lawmakers will likely look to close existing tax loopholes for businesses. They can also dig into the state\u2019s reserves, though they will have to repay those dollars in the future. Finally, they can slash existing spending plans.<\/p>\n

\"Colorado
Colorado Gov. Jared Polis speaks to reporters as he calls a special legislative session to address a nearly $1 billion budget deficit during a news conference at the governor\u2019s mansion in downtown Denver on Wednesday, Aug. 6, 2025. (Jesse Paul, The Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>

Mark Ferrandino, who leads the Governor\u2019s Office of State Planning and Budgeting, said how much money has to be cut from existing spending plans depends on how many tax loopholes the legislature closes.<\/p>\n

The hiring freeze is expected to save between $3 million and $7 million.<\/p>\n

\u201cWe are looking at all the options,\u201d Ferrandino said of where the cuts, which are expected to be hundreds of millions of dollars, will be made. \u201cOur goal is to protect K-12 education. But outside of that, we\u2019re looking at all options.\u201d<\/p>\n

While it will ultimately be the legislature\u2019s decision on how to close the budget gap, the governor\u2019s office offered suggestions:<\/p>\n

Draw down the state\u2019s budget reserve by between $200 million and $300 million, which would drop the reserve to no more than 13% from 15%. The reserve is there to cushion the budget when there\u2019s an economic downturn, and economists have warned that even 15% is too low should there be a severe recession.<\/div>\n
To raise revenue, the governor\u2019s office wants the legislature to continue decoupling from the federal qualified business income pass-through exemption for business owners. They also want lawmakers to expand the list of countries where corporations are prohibited from shielding their income from taxes, eliminate a roughly $80 million cumulative tax break provided to insurance companies that have a regional office in Colorado, and remove a tax benefit given to retailers meant to compensate them for the cost of collecting and paying sales taxes. Finally, Polis wants to let some large taxpayers, namely insurance companies, prepay their future taxes in exchange for a discount in future years.<\/div>\n
Cut somewhere in the range of $250 million and $300 million in spending on existing programs and services.<\/div>\n

House Speaker Julie McCluskie, D-Dillon, said the Democratic majority in the legislature will \u201cwork hard to minimize the fallout on our communities.\u201d<\/p>\n

\u201cBut that requires us to act now to mitigate the harm this bill has caused our state,\u201d she said in a written statement.<\/p>\n

Republicans in the legislature Wednesday accused Democrats of mismanaging the state\u2019s finances, but they did not offer any suggestions on how the General Assembly should address the spending gap. They have said, however, that they oppose closing tax loopholes to fill the gap.<\/p>\n

\u201cThis isn\u2019t our issue to fix,\u201d said Laurel Kruse, a spokesperson for the Colorado House Republicans.<\/p>\n

Kruse pointed to how GOP state lawmakers proposed cuts during the regular legislative session that ended in May, but many of those were political statements against Democratic priorities and wouldn\u2019t have covered the current gap. Republicans also proposed new spending during the budget process.<\/p>\n

The governor also wants lawmakers to use the special session to try to mitigate health insurance costs that are expected to rise sharply in Colorado because of tax credits eliminated by the big, beautiful bill.<\/p>\n

Polis also directed the legislature to change state law to allow patients on Medicaid to get care at Planned Parenthood using state dollars now that congressional Republicans have banned federal Medicaid dollars from being used to pay for care from the provider.<\/p>\n

\"Senate
Senate Majority Leader Robert Rodriguez, D-Denver, speaks to reporters before Gov. Jared Polis signs a bill in the governor\u2019s office at the Colorado Capitol in Denver on Thursday, April 24, 2025. (Jesse Paul, The Colorado Sun)<\/span><\/figcaption><\/figure>\n<\/p>
Rebooting AI negotiations<\/div>\n

When it comes to the AI law, tech groups and the governor have been griping about the bill since the legislature passed it in 2024 to prevent AI technology from discriminating against people based on age, race, ethnicity or other traits. The plan was for lawmakers to tweak the policy this year, but negotiations between the bill sponsors and industry fell apart in the final days of the legislative session that ended in May.<\/p>\n

The governor and some Democrats in the legislature tried a last minute maneuver to delay the law until 2027, but that, too, fell short.<\/p>\n

The law, unless it is changed, will require companies to assess and disclose, to regulators and consumers, when AI is being used for consequential decisions, like employment, loans and housing. It will also require companies to provide an explanation of how their technology works to consumers who don\u2019t like how AI made a determination. The Colorado Attorney General\u2019s Office would enforce the law, which carries a fine of up to $20,000 per violation, and field complaints. Right now, it\u2019s set to go into effect Feb. 1.<\/p>\n

Closing the nearly $1 billion hole in the budget may be easier than tackling the AI law.<\/p>\n

Senate Majority Leader Robert Rodriguez, a Denver Democrat who sponsored the 2024 bill creating the law, has been unwilling to give in to the tech industry\u2019s demands. He controls the calendar in the Senate, which means Polis likely can\u2019t go behind his back to cut a deal.<\/p>\n

\u201cI don\u2019t know how we pass an AI bill in three days,\u201d Rodriguez said earlier this summer, referencing how most special sessions in Colorado last just three days, the minimum time it takes to pass a bill.<\/p>\n

Rodriguez said negotiations this summer on the law had \u201cstalled.\u201d<\/p>\n

The governor said he included the artificial intelligence law in the special session call because he wants the legislature to at least have the chance to address the policy. He didn\u2019t take a position on whether it should be delayed or tweaked \u2013 or both.<\/p>\n

\u201cWe just want to give them the space to debate that and figure out a good outcome for Colorado,\u201d Polis said.<\/p>\n

The length of the special session will be up to the legislature.<\/p>\n

\u201cIt\u2019s really up to the legislators how long they want to debate these important topics,\u201d Polis said.<\/p>\n

The Colorado Sun is a reader-supported, nonpartisan news organization dedicated to covering Colorado issues. To learn more, go to coloradosun.com.<\/em><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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