Colorado is staring down a $1.2 billion tax revenue shortfall, and officials are split on what—or who—is to blame. While Governor Jared Polis’s office points to the new federal One Big Beautiful Bill Act (H.R.1) as the culprit, critics say the state’s own spending habits are just as responsible.
“The numbers don’t lie, and this new federal law is already ripping a massive hole in our current year’s budget,” said Eric Maruyama, a spokesperson for Governor Polis.
However, the Common Sense Institute of Colorado offered a different take, emphasizing that excessive spending is also driving the deficit.
The shortfall—now double the $600 million initially predicted by state economists—represents less than 3% of the total $44 billion budget for fiscal year 2025–26. Still, the projected deficit stands at $955 million once accounting for planned expenditures.
Governor Polis may call a special legislative session to address the issue.
“We may need to reconvene the General Assembly to deal with the terrible impacts from the bill,” Maruyama said, noting that the administration is still reviewing next steps.
The One Big Beautiful Bill Act shifts federal financial responsibilities—like Medicaid and SNAP funding—back to the states, forcing Colorado to shoulder more costs while federal tax changes reduce incoming revenue. Increased corporate deductions will also cut into state income.
During a recent Legislative Council meeting, agencies outlined the financial stress ahead. The session drew fire from Republicans, who called it “hyper-partisan.”
“The Democrats’ obsessive and irresponsible spending has forced this legislature to operate under a structural deficit for years,” said Senate Minority Leader Cleave Simpson.
Colorado Democrats, meanwhile, blame Republicans for the fallout.
“Coloradans can’t afford the budget cuts and increased costs due to the GOP budget,” said Colorado House Democrats on social media.
As both sides trade blame, one thing is clear: Colorado’s budget crisis is escalating, and decisions on spending cuts or revenue fixes are now more urgent than ever.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
Katie is a senior who has been on staff for three years. Her favorite type of stories to write is reviews and features. Katie’s favorite ice cream flavor is strawberry.
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