Governor outlines Colorado's $1.2B revenue shortfall and budget adjustments

Colorado's Joint Budget Committee convened on August 28, 2025, to address a significant $1.2 billion revenue shortfall impacting the state's budget. The committee emphasized the need for a balanced approach to manage both immediate fiscal challenges and long-term structural issues within the budget.

During the meeting, officials reported a projected deficit of $742 million in the general fund, exacerbated by a $40 million shortfall in the state's reserve. The committee expressed concern over the potential depletion of reserves, warning that a moderate recession could leave the state with no financial cushion. To mitigate this risk, they proposed limiting reserve usage to no more than 2%.

The discussions highlighted the financial implications of House Bill 1, which is expected to increase costs significantly in the coming years, potentially exceeding $750 million by the start of the next decade. This growing financial pressure necessitates careful planning to ensure that the state can meet its obligations without compromising essential services.

The committee also reviewed various budget reductions and transfers aimed at balancing the budget. Notably, they proposed sweeping funds from several programs, including $105 million from Proposition 123, which is tied to housing initiatives. This decision aims to maximize federal funding while ensuring that critical programs remain operational.

Additionally, the committee discussed the importance of preserving funding for K-12 education and public safety, emphasizing the need to analyze both short-term and long-term impacts of budget decisions. The meeting concluded with a commitment to continue evaluating fiscal strategies that address the current revenue shortfall while preparing for future budgetary pressures.

As Colorado navigates these financial challenges, the decisions made by the Joint Budget Committee will play a crucial role in shaping the state's fiscal landscape and ensuring the continued provision of essential services to its residents.