August 2025

Aug. 26, 2025, News from Colorado’s State Capitol

SPECIAL SESSION: WRAP UP

The Colorado General Assembly adjourned from the first (and we hope only) extraordinary session of 2025 at 3:30 p.m., Tue., Aug. 26.

Gov. Polis announced Aug. 6, that he was calling the legislature back for a special session to address the state’s looming $1 billion shortfall – a result, at least partially, of the passage of the federal budget (H.R. 1).

In his message to legislators calling them back to the capitol, Gov. Polis announced the topics to be addressed were limited to the following:

• Closing state tax loop-holes, and reducing or eliminating some tax credits and deductions
• Addressing concerns regarding Medicaid and Planned Parenthood, and the state’s reinsurance program
• Continued funding for the state’s Supplemental Nutritional Assistance Program
• Artificial Intelligence

The federal budget made significant changes to multiple state programs in both how they are administered and how the federal government will match funding for these programs. The result is a roughly $1 billion hole that the state must close.

The plan to address the gap is to reduce state spending by roughly $300 million (including a hiring freeze), eliminate tax loopholes that will allow for an increase in state revenue by $300 million, and use up to $500 million of the state’s reserve to cover any additional gaps.

Of the 34 bills introduced during the special session, a breakdown of the 10 bills that passed and are on their way to the governor is below.

The Lead Up

Leading up to the governor’s Aug. 6 announcement, Democrat leaders hosted multiple public meetings where they heard from state agencies and other affected NGOs on the impacts of the shortfall on safety-net and other programs around the state.

Republican lawmakers have labeled the governor’s plan a tax increase on Colorado families. Colorado Democrats launched their “Big Bill Fallout Tour” earlier this month that includes a whistle-stop tour of the state to “make sure Coloradans know exactly who’s responsible for our state’s $1.2 billion budget shortfall: Colorado’s Republican Congressional Delegation.”

Next Up

The governor is scheduled to present his response to the budget shortfall to the Joint Budget Committee at 2 p.m., Thu., Aug. 28, in keeping with the requirements of recently-passed SB 001 from the special session.

We anticipate the governor’s presentation to the JBC will include a rescission of the 1.6% Medicaid provider rate increase as part of the $300 million in reductions necessary to balance the state’s current year budget. This rescission will net $50 million, leaving approximately $250 million in additional cuts yet to come.

Next month, the JBC will meet to hear the state’s economic forecast at 10 a.m., Mon., Sept. 22. The governor’s proposed budget will be released on Nov. 1, with the JBC beginning its annual hearing process in mid-November.

Special Session Bill Breakdown

Six days and 34 introduced bills, here’s the breakdown of what passed:

HB 1006 Improve Affordability Private Health Insurance permits the sale of insurance premium and income tax credits, transfers a total of $110 million to the Health Insurance Affordability Enterprise (HIAE) from tax credit sale proceeds and from the Refinance Discretionary Account, and requires certain reporting and audit requirements.

SB 001 Process to Reduce Spending establishes procedures the Joint Budget Committee to hold hearings with the Governor’s Office when there are not sufficient revenues to carry out state services without negatively affecting the General Fund reserve.

SB 002 Funding for Certain Entities requires HCPF to use state funds to reimburse entities that are prohibited from receiving federal reimbursement from the Centers for Medicare and Medicaid Services

SB 003 SNAP Funding makes changes to Proposition MM, which was referred to voters at the Nov. 2025 statewide election by HB 25-1274. The bill also makes changes to the conditional allocations of funding for the Healthy School Meals for All Program under HB 25-1274, and adds funding allocations for the Supplemental Nutrition Assistance Program.

SB 004 AI Transparency delays the effective date for implementation of Senate Bill 24-205 from February 1, 2026, to June 30, 2026.

SB 005 Reallocate Wolf Reintroduction Funding to Health Insurance Enterprise reduces appropriations to the Department of Natural Resources for gray wolf reintroduction and transfers that amount to the Health Insurance Affordability Cash Fund.

HB 1001 Business Income Deduction Add-Back permanently extends the requirement for certain taxpayers to add back their federal qualified business income deduction when calculating their Colorado taxable income starting with tax year 2026.

HB 1002 Corporate Income Tax Foreign Jurisdictions creates a state corporate taxable income addition for federal foreign-derived eligible income deductions, expands a state subtraction from corporate income, adds countries to the list of specified foreign jurisdictions presumed to be used for tax avoidance, and allows state discretion to be used in determining foreign tax avoidance.

HB 1003 Insurance Premium Tax Rate for Home Offices repeals the reduced insurance premium tax rate for insurance companies that qualify as having a regional home office in Colorado, beginning in calendar year 2026.

HB 1004 Sale of Tax Credits authorizes the state treasurer to sell insurance premium tax credits and corporate income tax credits, beginning in FY 2025-26.

HB 1005 Eliminate State Sales Tax Vendor Fee eliminates the state sales tax vendor fee beginning January 1, 2026, and makes changes to the allocation of sales tax revenue to the Highway Development Grant Fund.

Important Dates

August

• 28 JBC hears the governor’s presentation on the FY 2025-26 revenue shortfall

September

• 16 Water Resources & Agriculture Review Committee
• 18 Board of Pharmacy meeting
• 22 JBC Quarterly Revenue Forecast

October

• 15 Dept. of Regulatory Agencies Sunset/Sunrise Reports published
• 17 Committee on the Treatment of Persons with Behavioral Health Disorders in the Criminal and Juvenile Justice System
• 21 Legislative Audit Committee, Transportation Legislation Review Committee
• 29 Water Resources and Agriculture Review Committee

November

• 1 Proposed FY 2026-27 State Budget released
• 14 Legislative Counsel