DENVER, Colo. — Colorado lawmakers returned to the State Capitol on Thursday for a special legislative session to address a $750 million budget shortfall, but deep political divides are shaping the battle over how to fix the deficit.
The shortfall stems from President Trump’s “Big Beautiful Bill”, which lowered federal taxes for businesses and individuals. Since Colorado is one of only four states that ties state taxes to federal taxable income, the law resulted in less state revenue.
Governor Jared Polis has set the parameters for the session, directing lawmakers to find ways to boost tax revenue rather than make deep spending cuts. However, Democrats and Republicans remain sharply divided on how to move forward.
Democrats Push to Close Tax Loopholes
Democrats, led by Rep. Yara Zokaie of Fort Collins, want to roll back up to $400 million in business tax breaks, including:
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$70 million annual incentive for insurance companies to open regional headquarters in Colorado
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An end to a sales tax collection credit for businesses
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Up to $100 million in new fees on health insurers to offset lost federal subsidies for low-income families
Zokaie defended the plan, saying,
“When we are talking about taking money from working families and, quite literally, food out of the mouths of children, food stamps are on the line here. It’s unethical to prioritize corporate handouts over people.”
However, industry leaders warn of economic fallout. Carol Walker of the Rocky Mountain Insurance Information Association argued the rollback could cost thousands of jobs, saying:
“This signals to the insurance industry that they aren’t welcome here.”
Restaurants are also concerned. Nick Hoover of the Colorado Restaurant Association warned,
“It’s death by a thousand cuts. This is yet another cost increase that will hurt the industry.”
Republicans Demand Spending Cuts
Republicans, led by Sen. Barb Kirkmeyer, argue the state should reduce spending instead of raising taxes.
“The federal government gave us tax relief, and Democrats’ answer is to hike taxes on Coloradans,” Kirkmeyer said.
She introduced a proposal to adjust a tax credit program that benefits families making under $95,000 a year. The Department of Revenue says families have collectively received $663 million more than their tax liability, and Kirkmeyer wants to cap payments to cover only what’s owed.
She also called for following the Taxpayer Bill of Rights (TABOR), which requires voter approval for tax policy changes:
“If Democrats are confident in their plan, why not put it on the ballot?”
Other Key Items on the Agenda
Aside from the budget, lawmakers will also consider:
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Four bills on artificial intelligence regulations set to take effect in February
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Funding proposals for food stamps and Planned Parenthood
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Using $300 million from the state reserve to help close the deficit
What’s Next
The special session is expected to last up to one week. Lawmakers must negotiate a compromise between increased tax revenue and spending cuts to balance the budget while also navigating contentious issues like AI laws, healthcare funding, and social programs.
If you’d like, I can prepare a quick, simplified summary showing Democrats’ vs. Republicans’ proposals in a side-by-side comparison table. It would make the budget fight easier to understand at a glance.
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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