Two days after the Colorado Legislature ended a special session where it raised taxes on businesses to close a $750 million budget shortfall, Gov. Jared Polis announced $252 million in budget savings.
The Department of Health Care Policy and Financing — which administers Medicaid — will see the biggest cut. It will lose $79 million.
The governor also cut nearly $13 million from higher education, almost $4 million from the Department of Corrections, for transgender health care, about $2 million for the state’s two mental health hospitals, and $631,000 for health care for undocumented women and children.
Polis says his goal was to spare K-12 education and public safety and spread the pain across several state departments, both of which he did.
In addition to budget cuts, he pulled $149 million from about a dozen funds and transferred the money into the general fund. The funds include College Invest, Disability Support, School and Child Care Clean Drinking Water, and Proposition 123, which is for affordable housing.
The governor says many of the funds have balances that exceed demands.
“Our goal was to cause the least harm, the least damage.” Polis said.
Medicaid providers took the biggest hit with a $38 million across-the-board reduction in reimbursements rates.
Dental provider rates were cut an additional $2.5 million and rates for pediatric behavioral therapists another $2.7 million.
Republican state Sen. Barb Kirkmeyer has led the fight to increase provider rates.
“I’m just curious as to why that you cut provider rates? And you cut health care, essentially … making it difficult for families that are on Medicaid to access health care,” she asked the governor during a hearing on Thursday.
Gov. Jared Polis speaks about the cuts with the Joint Budget Committee on Thursday.
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The governor says President Trump’s “Big Beautiful Bill,” or H.R. 1, is to blame for the cuts. It lowered taxes, leaving the state without enough revenue to cover this year’s expenditures.
“I don’t look at it as us cutting health care. I look at it as us delivering the cuts that were in H.R. 1,” Polis said.
The state department that oversees Medicaid makes up the biggest part of the general fund and received the biggest cut.
Colorado Budget Director Mark Ferrandino says spending on Medicaid is unsustainable.
“We have only so many choices and so many levers that we can use to try and address both this budget shortfall and the long-term trajectory that we’re dealing with,” he said.
Higher education also took a big hit just as the new school year starts. The governor says it is still receiving $22 million more than last year.
But budget writers are worried about pulling the rug out from under colleges and universities, as well as Medicaid providers. Democratic state Sen. Jeff Bridges, Chair of the Joint Budget Committee, told Ferrandino, “They built their budgets, they gave raises, they essentially planned for that to be part of what it is they take into this.”
The legislature passed a bill giving the Governor sole responsibility for making spending cuts, but Republican state Rep. Rick Taggert asked Ferrandino if the Budget Committee could have a say.
“Are you open to us discussing as a group other areas that we might consider reducing spending?” Taggert said.
“If there are other options that we want to look at, we are completely open to having those conversations,” said Ferrandino.
In addition to the budget cuts and transfers, the governor also implemented a state hiring freeze, which he says will save about $3 million. Despite all the savings, he will still need to move about $318 million from the state reserve fund to balance the budget.
While there is no budget surplus this year — so no refunds under the Taxpayer Bill of Rights — the governor expects a surplus again in the 2026 and 2027 tax years.
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