As we head into the last weeks of summer break, my family has been preparing for back-to-school, and now I’m prepping for back-to-the-Capitol for Special Session. Before I head back to Denver I’ll be hosting state legislators and business leaders from across Colorado in HD59 this coming week as part of a tour of the Western Slope.
Last month, I gave a brief overview of the coming impacts of the federal Budget Bill. Now that the state analysts have had time to look at the details of the bill, we have a better sense of what’s coming.
Colorado had a deficit of about $1.2 billion going into 2025, and we worked hard to pass a balanced budget in May. Now, however, the nonpartisan analysts at the state legislature are estimating that we will be another $1.2 billion short by this December because of the passage of HR1 in Congress.
There are a few things I want to highlight. First, the Budget Bill’s changes to federal tax policy will reduce state revenue. Colorado will be particularly impacted by these changes because we are one of only four states that automatically incorporates federal tax policy into state tax policy. This $1.2 billion reduction will put Colorado below the Taxpayer’s Bill of Rights spending cap, meaning there will be no TABOR refunds for 2025.
Since some major Colorado tax credits are tied to how much TABOR surplus the state has, both the Family Affordability Tax Credit and the expanded Earned Income Tax Credit will be unavailable this year. Even before the coming round of state budget cuts, this bill is already taking money out of working families’ pockets.
Second, federal cuts to the Supplemental Nutrition Assistance Program are going to shift over $170 million in costs to the state for food assistance. The federal government is cutting their contribution to the administration and management of SNAP from 50% to 25% in the coming years, doubling costs for our counties while increasing their workload with new requirements. The Budget Bill also bases future federal funding for SNAP on each states’ error rate, with states with rates over 6% receiving significantly less.
This error rate is not a measure of fraud, which is closely monitored and rare. Funds are tied to the administrative error rate, which includes both over and under determinations of benefits. Because of the size and complexity of the program, few states have error rates under 6%. States like Colorado where SNAP administration is managed at the local, not state level, typically also have higher administrative error rates because there is no centralized management. All of this means less money to put food on the table for families, veterans and seniors.
Third, in addition to the Medicaid cuts I discussed last month, Congress also failed to repass the Affordable Care Act’s enhanced premium tax credit. This credit helped cover the cost of private insurance for low to medium income individuals, softening the blow for working Americans whose income is just over the Medicaid cutoff.
Killing this tax credit will take health insurance away from so many Coloradans that it will shake the entire private market, raising premiums for everyone. Premiums are estimated to increase an average of 28% in Colorado as a whole, and harder hit areas like the Western Slope will face premium increases of 38% or more over the next two years. With too many people already struggling with the cost of living in Southwest Colorado, these numbers are daunting.
We will be working during a Special Legislative Session in two weeks to rebalance the state budget to account for this new $1.2 billion deficit, as well as these cuts to food assistance and looming premium increases.
Katie Stewart represents House District 59 in the Colorado State House, which encompasses Archuleta, La Plata and San Juan counties and most of Montezuma County. Reach her at katie.stewart.house@coleg.gov.
