Colorado lawmakers in their effort to balance the state budget are considering whether to shift $130 million from an affordable housing fund approved by voters.

House Bill 26-1360, one of the dozens of “orbital” bills running alongside the main budget bill, would transfer that money to the state’s general fund. The Legislature is working to pass a budget package that closes a $1.5 billion shortfall, and many proposals make deep cuts to existing programs.

Voters approved Proposition 123 in 2022 to support affordable housing projects in the state. It funnels some existing income tax revenue to finance development and preservation projects, as well as local government projects for home ownership and homelessness prevention, amid an ongoing shortage of affordable housing options. Over $300 million was awarded during the 2024-2025 fiscal year between those housing support and financing funds.

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But members of the bipartisan Joint Budget Committee want to tap into the revenue to help the state’s strained spending plan. It’s part of a collection of cuts and transfers, including a 2 percent provider rate cut in Medicaid, reduction in the state’s rainy day fund, and many departmental budget decreases.

“This is a tough bill, but I will note that the original voter-approved measure contemplated difficult budgetary situations like this, and allows for this transfer,” JBC member Representative Kyle Brown, a Louisville Democrat, said.

Republicans in the House argued that the bill ran afoul of voter intent and understanding of the proposition.

“The voters didn’t realize they were opening a piggy bank for the Legislature here to just spend away,” Representative Rebecca Keltie, a Colorado Springs Republican, said. “This money was meant for one thing, and now without the people even knowing, is going to be used for something else.”

The bill passed on a preliminary vote in the House on Thursday. Once that chamber gives final approval to the budget package, it will head to the Senate, most likely next week.

Representative Junie Joseph, a Boulder Democrat, said she worries how the transfer could slow progress and create uncertainty in communities that are using the money to build otherwise unworkable projects.

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“Affordable housing does not happen without sustained investment,” she said on the House floor Thursday. “Developing housing that is affordable to working families is complex and expensive. Rising land costs, construction materials, labor shortages and financing gaps all create real barriers. That is the role of Proposition 123.”

Andrea Burns, the chief impact officer at the Urban Land Conservancy, told lawmakers at a committee hearing earlier this week that $1 million from the concessionary debt program funded through Proposition 123 enabled the construction of The Irving at Mile High Vista in west Denver. Most of the money considered in the bill would come from the fund managed by the Governor’s Office of Economic Development and International Trade for land banking, equity and debt programs.

“Affordable housing is not a net cost to Colorado’s economy. It is a contributor. It is just good policy to continue funding Prop 123 at the highest levels,” she said.

Burns, in addition to other advocates, pushed lawmakers to prioritize any remaining money to fund projects for the highest-need Coloradans.

“The timing really couldn’t be worse,” Cathy Alderman, a spokesperson for the Colorado Coalition for the Homeless, told lawmakers at that same committee hearing. “Colorado continues to experience an affordable housing crisis, and this is felt most acutely by lower-income households, where the market cannot and will not serve their housing needs.”