Colorado's Money Woes: What's Next?

Colorado is facing another tough year when it comes to money. Lawmakers are getting ready for a tough time, as the state's income is expected to drop. This means they will have to cut spending by a lot, around $850 million. They already cut $1. 2 billion this year and another $783 million over the summer because of changes in federal tax laws. The state's main source of income, the general fund, is expected to have less money than before. This is partly because of a federal government shutdown that lasted for 43 days. The shutdown made it hard to get economic data. The data that is available shows that the job market is cooling down and that there is a big difference in wage growth between lower- and higher-income earners.The state's main source of income is also limited by a law called TABOR. This law controls how much money the state can collect and spend. Because of this law, taxpayers will get some money back in 2026, but they won't get any in 2027. The law also means that some tax credits won't be available in 2026 and 2027. One of the biggest things the state spends money on is Medicaid. This program now makes up about one-third of the state's spending. The governor's plan to reduce Medicaid spending by nearly $300 million has been met with criticism from both Democrats and Republicans. They say it will hurt low-income families. The governor, however, says it's necessary to make the program more sustainable. The state's constitution requires lawmakers to pass a deficit-free budget. This means that some spending reductions will need to happen next year. The governor has issued a state hiring freeze that will last through the end of February.