Polis extends spending cuts as Colorado faces $800M gap

“These are challenging times that force difficult financial decisions to maintain a balanced budget,” wrote Mark Ferrandino, director of the Colorado Office of State Planning and Budgeting, in a letter to the Joint Budget Committee. “It is imperative to act quickly to reduce spending.”

The executive order signed by Polis extended two others from earlier this year that suspended certain spending to address what the state has labeled an “unexpected and unnecessary shortfall” due to One Big Beautiful Bill Act, which Congress passed July 1.

Because of the act's federal spending cuts, the law reduced state revenue by over $1.2 billion, eliminated the state’s surplus and put Colorado’s budget $800 million out of balance for fiscal year 2025-2026.

To address that shortfall, Polis and Colorado took steps to eliminate spending and maintain the statutory reserve requirements directed by statute. In total, those spending reductions remain $265.7 million.

The new executive order ends Feb. 28, 2026. By that time, the state anticipates having a new plan for budget reductions and supplemental budget requests.

In the meantime, there has been a number of specific line item reductions that Ferrandino said were intended to make the “least possible impact to state programs and services.”

Those cuts include programs and services, in whole or in part, implemented by the Department of Corrections, Department of Health Care Policy & Financing, Department of Higher Education and many more. In total, more than a half dozen departments were affected by the cuts.

As another cost-saving measure, state agencies also have implemented hiring freezes.

Because the budget for fiscal year 2025-2026 is now out of balance, this will have a tangible impact on Coloradans. It means they will no longer receive refund checks from the state's Taxpayer's Bill of Rights or TABOR, which normally returns tax surpluses to the state’s citizens.

“I have determined that the deficiency of revenues ... persists,” Polis said in his latest executive order. “By this executive order, I am extending the suspension, in whole or in part, of the functions and services of state government ... to reduce expenditures.”

Republicans have pointed some of the blame for the state's budget crisis at the spending they say Colorado Democrats are prioritizing.

“The CEO of Denver Health said this influx of illegal immigrants seeking care at our hospitals is going to break Denver Health. It's tens of millions of dollars of uncompensated care to illegal immigrants and Republicans in Congress put a stop to that,” said U.S. Rep. Gabe Evans, R-Colorado, in a recent radio appearance. “Democrats in Colorado can't stand it. They actually doubled down and added more taxpayer money to illegal immigrant health care in the special session that the state had earlier this year to the tune of $90 million of everyday Coloradans hard earned tax money going out of their pocket and going to pay for health care for people who are illegally present in the United States.”