Senior economist warns of $1.5 billion Colorado budget shortfall, urges support for graduated income tax initiative

Chris Stiffler, senior economist at the Colorado Fiscal Institute, told a League of Women Voters of Colorado Health Task Force meeting that Colorado faces a roughly $1.5 billion shortfall in next year’s budget and urged attendees to help collect signatures for a ballot measure to raise revenue.

"My first takeaway, the big the big number ... is a $1,500,000,000 shortfall," Stiffler said, summarizing the March revenue forecast and explaining that the gap reflects both a baseline shortfall and additional caseload and inflation pressures.

Why it matters: Stiffler said much of the gap stems from federal tax changes in HR 1 that reduced Colorado’s taxable base — including deductions for tips, overtime and expanded corporate depreciation — and that the state’s linkage to the federal taxable income base means those changes flowed directly into lower state revenue. He warned the shortfall threatens Medicaid, school funding and other services that depend on the general fund.

Stiffler outlined the mechanics for non‑specialist listeners: Colorado’s general fund is capped by TABOR (the Taxpayer Bill of Rights), which limits how much the state can retain and often produces TABOR rebates to taxpayers instead of additional general‑fund revenue. He said that even if revenue unexpectedly increased, TABOR can limit the general fund benefit while increasing rebates.

On the policy details, Stiffler said the state already absorbed about a $1 billion revenue hit last year tied to HR 1 provisions and that several refundable tax credits (the earned income tax credit and the family affordability tax credit among them) are revenue‑triggered and may be reduced or “turned off” if growth does not return.

Stiffler described specific programmatic risks. On Medicaid, he warned of both budget pressure and pending federal work verification changes: "Starting in 2027 ... you'll now ... have to show that you are working at least 80 a month," he said, adding that more frequent verification and work requirements could lead to many people losing coverage. He and his team estimated that roughly 65,000 women could lose eligibility under the proposed verification rules, though he framed the number as the result of modeling and census‑based coding rather than a ledgered administrative count.

During audience questions, Jeff, a physician who said he had worked in Alamosa, asked whether rural hospitals that operate on thin margins and rely on Medicaid have any safety net if coverage or provider rates are cut. Stiffler replied there was no ready federal or state backstop and reiterated his view that the budget math does not work without new revenue.

Jan, a retired critical care nurse and member of a coalition studying single‑payer options, urged a move away from profit‑driven health care and noted the Colorado School of Public Health is studying single‑payer feasibility under funding the coalition raised.

Stiffler presented Initiative 1‑95 as the campaign response: a proposed constitutional amendment to create a graduated income tax that would, he said, reduce rates for about 97% of taxpayers while increasing rates on the highest earners. "We're currently collecting signatures to have a graduated income tax ... initiative 1 95 would do," he said, adding the campaign’s target of about 200,000 signatures and a deadline to submit verified signatures by Aug. 3. He said projected revenue from the measure was in the range of $2 billion to $2.7 billion and that funds would be dedicated to health care, schools and child care.

Other attendees asked about school budgets and enrollment declines. A resident, Wendy, asked why districts’ budgets can rise while enrollment falls; Stiffler explained district‑level differences, fixed costs, ballot overrides that raise local property taxes, and the difference between marginal and fixed expenses in schools.

The meeting closed with the moderator asking task force members to read Initiative 1‑95 materials, attend signature‑gatherer training sessions, and help collect the required notarized signatures (at least 2% in each of Colorado’s 35 senate districts) to qualify the measure for the ballot. The group adjourned afterward for dinner.

What was not decided: no formal motions or votes were taken at the meeting; attendees discussed the initiative and next steps for volunteer organizing but did not adopt formal organizational endorsements.

Next steps: the campaign is in signature collection with an early goal of showing district coverage to attract further donors and paid petition gatherers if necessary.