The Colorado House of Representatives will begin debate today on the annual spending bill, a package of legislation that amounts to a $46.8 billion budget to take effect at the start of the next fiscal year in July.

It is the second year in a row that lawmakers are tasked with filling a massive budget deficit, not counting an emergency special session last summer to plug another budget gap caused by federal tax code legislation. This year, the bipartisan Joint Budget Committee faced a $1.5 billion shortfall between how much it would cost to fund state programs at current levels and how much the state has available to spend.

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In addition to denying some departmental funding increases, the proposed budget, represented in the so-called long bill, makes cuts to existing programs, transfers money from various cash funds, and trims spending for the state’s Medicaid program.

“We were challenged with an excruciatingly difficult year,” JBC Chair Representative Emily Sirota, a Denver Democrat, told lawmakers Tuesday. “This long bill is not filled with new investments and new programming to serve the people of Colorado. It is filled with many painful reductions that we had to make in order to bring our budget in balance.”

The House will likely take the rest of the week to debate the budget, which includes the 200-page long bill and over 60 related bills, and then send it to the Senate. The Legislature is constitutionally required to pass a balanced budget every year.

The section of the budget bill that covers the general fund, the mostly discretionary portion of state spending and the part most JBC decisions concern, runs about $17.3 billion and is a 1.4% increase over the previous fiscal year. The entire budget encompasses general fund spending as well as federal dollars and cash funds — money from fees on specific activities for a specific purpose.

The bill decreases spending relative to the previous fiscal year for 13 state departments, but it still contains more than $200 million more in general fund appropriations. The largest increase would be for the Department of Health Care Policy and Financing, which oversees Medicaid.

Medicaid cuts

Medicaid costs have rocketed in recent years, driving a lot of the budget woes and ballooning to make up about one-third of Colorado’s entire general fund budget. The program’s price tag is rising faster than the annual growth in the budget allowed by the Taxpayer’s Bill of Rights, which sets a cap on state spending based on inflation and population. The department in charge of Medicaid will still see an increase in spending, about 3.7%, but the proposed budget makes a series of cuts.

“When you talk to the families who are impacted, especially the Medicaid side, they will feel these cuts,” JBC member Representative Kyle Brown, a Louisville Democrat, told reporters last week. “We have certainly heard from them throughout the process, and we have tried to do our best to protect as many folks as we can. We would not be doing our job if we did not find ways to soften the blow.”

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The budget reduces most provider rates by 2% to save about $85 million in general fund revenue. It puts a cap on adult dental services to save almost $7 million, reduces the reimbursement rate for non-emergency medical transportation to save over $15 million, and lowers some funding for home nurses to save almost $14 million.

Another change would affect the waitlist for around-the-clock care for people with intellectual and developmental disabilities. For every two that gets off the waitlist for a waiver, just one person would be added. The average waitlist time for a person to get a waiver for that care is seven years, so the change could greatly extend that time. It is projected to save $3.3 million this year and around $10 million in later years.

The budget also seeks to eventually put a 56-hour weekly cap on reimbursements for caregivers to people with disabilities, saving under $300,000 this year but multiple millions of dollars later on.

Additionally, the JBC is putting forward a bill to limit Cover All Coloradans, the program that provides health care coverage for children and pregnant people who would qualify for Medicaid regardless of their immigration status. Lawmakers created that program in 2022, but the actual costs far exceeded expectations. The plan is to limit annual dental services, eliminate long-term services for people not already using them and cap enrollment for children at 25,000.

JBC member Rick Taggart, a Grand Junction Republican, said the bill was the hardest to run this year.

“These are individuals, and if we don’t support these individuals, it ends up being uncompensated care in our hospitals and clinics,” he said. “I have hospitals that are on the brink, and they can’t afford any more uncompensated care, so it’s important to realize that a program like this helps our hospitals and clinics from a standpoint of uncompensated care.”

The changes to the program will save the state $16 million for the upcoming budget and $32 million for the one after that.

Prisons growing

The Department of Corrections has the second-highest increase in the proposed budget. It includes funding for 941 new prison beds and $27 million more for the state prisons’ medical caseload. There is also a net increase of over $18 million for some salary raises. The JBC also gave the governor’s office permission to submit an emergency interim funding request to pay a private prison contractor to operate a closed facility in southern Colorado, rejecting a proposal to buy the prison outright.

“Nobody wants to fund prison beds,” Brown said. “People keep being sentenced into the prisons, and it is our responsibility as a state to take care of those folks.”

“The reality is that the caseload projections are what they are, and to some degree we have to fund them. If the General Assembly is serious about changing that dynamic, then we need to pass laws.”

Some other notable details from the budget bill:

• Reducing the state’s general fund reserve requirement — basically the state’s rainy-day fund — from 15% to 13% for the next budget year, freeing up about $340 million
• Transferring over $100 million from various cash funds to the general fund, including severance tax funds, the Mobile Home Park Water Quality Fund and the Technology Risk Prevention and Response fund
• Transferring $73 million from the Unclaimed Property Trust Fund to the general fund
• Allowing colleges and universities to increase tuition by 3.5% for in-state students and 5% for out-of-state students, more than the 2.6% and 3% initially proposed by Governor Jared Polis last fall
• Increasing the state share for public school funding by about $184 million (the public school budget is mostly decided through the forthcoming School Finance Act)
• Diverting $130 million from the Affordable Housing Fund, created through Proposition 123, to the General Fund.