EDITORIAL: Reality of Colorado budget fallout from ‘Big Beautiful Bill’ negates GOP theatrics

When Colorado lawmakers return to the state Capitol Aug. 21 for a special legislative session, they won’t have the luxury of political posturing or even some public hand-wringing.

They will be staring down a $750 million hole in the state budget, created almost overnight by the One Big, Beautiful Bill imposed on Americans by President Donald Trump and a complicit GOP Congress.

Despite vapid dramatics and misinformation by some Colorado Republicans, the Legislature is legally bound to fill that budget hole.

Just as Gov. Jared Polis pointed out last week, the math is clear.

On July 1, the $43.9 billion state budget for this fiscal year was balanced, as required under state law. Three days later, Trump signed the One Big Beautiful Bill, which dramatically expanded the federal standard deduction and rewrote other portions of the tax code.

In most states, those changes would ripple slowly into the lives and businesses of residents, or only partially into state finances. In Colorado, they’ll crash in like a tidal wave.

That’s because Colorado is one of just four states that use federal taxable income as the starting point for calculating state taxes. And Colorado has what’s called “rolling conformity” with the federal tax code. The Colorado Sun’s Jesse Paul painstaking takes readers through the detail and nuance of how Colorado got here.

It should be required reading for state Republican lawmakers who say the special session is simply political theater intended to throw cold water on a federal budget bill that almost every independent expert analyst says bodes ill for the national deficit and for government services that touch virtually everyone in the nation.

Simply put: whenever Congress changes federal taxable income, Colorado’s tax base changes immediately and automatically. And because the Big Beautiful Bill significantly shrinks that taxable income, Colorado’s revenue projections have been gutted.

The governor’s office estimates the measure will reduce corporate income tax revenue by as much as $950 million and individual income tax revenue by as much as $460 million, for a total loss of roughly $1.2 billion, Polis and state budget officials told the Sentinel.

The hit to this fiscal year’s budget, after accounting for the state’s spending cap under the Taxpayer’s Bill of Rights, is projected to be $680 million to $783 million, the Colorado Sun reported.

This is not a shortfall that can be waved away with rosy revenue forecasts or creative accounting, and Colorado cannot legally run a deficit. The so-called Colorado Taxpayer Bill of Rights prohibits raising taxes without a vote of the people. That leaves only a few tools in the legislative toolbox to make a fix. Polis and lawmakers can either tap state reserves, close tax loopholes or cut spending.

Polis has offered a plan on how to soften the blow.

They include drawing down the state’s reserves by $200 million-$300 million, ending some corporate tax breaks and encouraging large taxpayers to prepay by offering future discounts.

But even this plan calls for $250 million to $300 million in spending cuts to existing programs and services.

Without spending cuts, the numbers simply won’t add up.

Some have argued the Legislature should abandon rolling conformity or switch from federal taxable income to adjusted gross income to shield Colorado from future federal tax changes.

Possibly, but that won’t address this immediate problem. State budget officials say such a shift would require an overhaul of the taxation system, new rules, new forms and possibly even a larger state revenue department.

Polis has warned that moving away from rolling conformity would force Coloradans to file separate state and federal tax returns, stripping away a convenience taxpayers now enjoy.

For the special session, the priority is not redesigning the tax code but balancing the books. We agree with the governor’s team who say the state must protect public schools.

Likewise, arguments from Republican leaders in the Legislature show poor judgment and understating of the problem, and how it will impact their constituents.

House Minority Leader Rose Pugliese said that there is no crisis, except for Democrat-controlled state officers boosting state spending and now having to dial some back.

“We do not need a special session,” Pugliese said in a statement. “We need leadership that knows how to budget responsibly without putting political agendas ahead of Colorado families.”

Her comments show either a stunning lack of understanding of Colorado state finances or a deliberate attempt to mislead the public. The Colorado TABOR amendment sets an annual cap on state spending, not legislators. State lawmakers decide, within numerous limits, where the money goes.

Pugliese and other GOP critics ignore the fact that had their party’s candidates been in control of the state budget, the same cuts would be imposed.

Their chief complaint right now is that the special session is planned around the state fair.

“The State Fair is a time for rural communities to come together and celebrate their contributions; feeding our state, powering our economy, and showcasing Colorado values,” Assistant Minority Leader Rep. Ty Winter said in a statement.

The state fair is 11 days long, ending on Labor Day. The special session could take as few as three days. Regardless, only state lawmakers need to attend the special session. And given the gravity of the budget cuts, and the threats that the Big Beautiful Bill holds, especially for rural Colorado residents, the trite slight makes Republicans come off as ill-prepared for serious leadership and engagement.

Colorado seriously needs Republicans to join in the effort to deal with this statewide financial crisis threatening to affect every resident in every part of the state. To do that, they have to be able to be taken seriously.

Colorado has faced budget crises before. The Great Recession forced lawmakers to slash higher education funding, freeze teacher salaries, and delay transportation projects.

The cuts ahead may feel just as bitter, but they are dictated by the numbers and the law. Pragmatic consideration, not political ideology, needs to guide the work needed on the state budget.