We would like to correct the facts. Colorado is not facing a financial crisis. On the contrary, state government is growing at a good clip, fueled by a healthy economy, a financially prudent governor who saved during years of plenty, and sound fiscal policy decisions.
However, our government has experienced tremendous growth in recent years and it is time to take a step back.
Sen. Barbara Kirkmeyer is right that Colorado lawmakers can’t find their way out of the roughly $700 million deficit projected for the 2025-2026 budget.
The prudent way to manage this deficit is not to sell a state asset – Pinnacol Assurance – and use the proceeds to repay a state debt to the Association of Retired Civil Servants. No, the healthy way forward is to reduce some fat.
Some of the state’s growth has been brilliant. Gov. Jared Polis managed to fully fund education for the first time in decades, while expanding early childhood education through a statewide preschool program.
And some of the growth was driven by Colorado voters. Voters approved a tax to help fund the universal preschool program, a tax for free school meals for all children and a tax for a paid family leave program.
However, administering these programs also imposed taxes on the General Fund, requiring state investments in addition to new tax revenues to keep these programs operating at full capacity. These are important programs and we are pleased that the state is investing in our next generation. However, maintaining these and other new services requires belt-tightening if revenues do not keep up with growth.
The other big expansion is a proposed increase in the amount of the state’s health insurance safety net – Medicaid – which reimburses doctors and hospitals for the care they provide to low-income residents and children. returned from Colorado. Even with this increase, Medicaid still pays doctors less than private insurance companies. So we understand why change was necessary, but the timing was wrong. Along with the proposed payment increase, the Medicaid utilization rate has increased, meaning more eligible Coloradans are seeking medical care.
That pressure could necessitate reducing provider fees if the state can’t cut spending elsewhere.
Another difficulty is that a portion of the increased state revenue must be returned to taxpayers under the Taxpayer Bill of Rights. Lawmakers wisely increased the Earned Income Tax Credit by about $200 million to ensure that a good portion of the TABOR rebate money would go to Coloradans who need relief most stimulus, but even after this tax expenditure – and many other new tax credits were approved. – the state will still return about $500 million to taxpayers.
This is all good news. Our economy is growing, taxpayers are getting money back, and our programs to help our children grow, learn, and thrive are receiving more public investment.
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