DENVER, Colo. (KKCO) — Colorado is facing a massive $1.2 billion budget shortfall, prompting Governor Jared Polis to call a special legislative session beginning August 21, 2025, at 10 a.m. The financial gap stems from federal tax changes that have slashed state revenue and shifted costs onto state governments.
Why the Shortfall?
The crisis is largely due to H.R.1, a federal law that increased tax deductions for corporations. State officials say these changes have immediately cut into Colorado’s revenue, eliminating the TABOR refund—a rebate typically returned to taxpayers under the state’s Taxpayer’s Bill of Rights.
Governor’s Response
Gov. Polis described the situation as “budgetary chaos,” with Mark Ferrandino, Director of the Office of State Planning and Budgeting, adding that the federal changes have unbalanced Colorado’s budget.
“All options are on the table,” Ferrandino said, emphasizing the urgency of collaboration with lawmakers.
Immediate Action: Hiring Freeze
In a move to conserve funds, Colorado will implement a hiring freeze from August 27 through December 31, 2025. The goal is to stabilize state finances amid the unexpected loss of revenue.
Federal Cuts and Local Impact
While the White House has defended the federal budget reductions, citing billions in taxpayer savings, Colorado leaders are scrambling to address the local fallout—which includes lost refunds, halted hiring, and looming cuts to state programs.
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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