Colorado Faces $1B Shortfall After Federal Tax Bill

Colorado is facing a nearly $1 billion budget shortfall for the current fiscal year following the passage of the federal 'One Big Beautiful Bill Act' (HR1), signed by President Donald Trump. The law’s permanent corporate tax breaks and other provisions are expected to reduce state revenue by $1.2 billion, with Colorado's automatic conformity to the federal tax code exacerbating the impact. Lawmakers, still recovering from a previous $1.2 billion shortfall, are being urged to implement immediate budget cuts to prevent the deficit from surpassing $2 billion. State officials are considering suspending tax credits for families and tapping into reserves, but constitutional limits restrict options for raising new revenue. Departments have already been directed to halt maintenance and prepare for additional spending reductions. The crisis is expected to prompt Governor Jared Polis to call a special legislative session.