Colorado Lawmakers Convene Special Session to Address $1.2 Billion Revenue Shortfall

Strategic Insights -

Colorado state lawmakers are gathering for a special session to address a $1.2 billion revenue shortfall, sparked by changes to the federal tax code. The session, the third in as many years, will focus on revising the state's budget and finding solutions to plug the budget hole for the current fiscal year. Lawmakers will consider a series of bills to close tax loopholes, cut program spending, and dip into the state's budgetary reserves.

Key Takeaways:

  • The revenue shortfall is estimated to be between $680 million and $783 million, with a decline in corporate revenue income of about $950 million and $460 million less in individual income tax revenue.
  • Democrats and Republicans are clashing over the cause of the budget hole, with Democrats blaming President Trump and Congress for the revenue hit, while Republicans argue it is a result of Democratic overspending and a ballooning state budget.
  • The Democratic majority plans to pass a series of bills to close tax loopholes, cut program spending, and dip into the state's budgetary reserves, including legislation to repeal a corporate tax break for insurance companies and decouple a federal tax deduction for business owners.
  • Republicans will also propose bills during the special session, but without bipartisan sponsorship, it is unlikely they will make it to the floor for debate and votes.
  • Lawmakers will also consider legislation on health insurance premiums and artificial intelligence.

Statistics:

  • The revenue shortfall is estimated to be between $680 million and $783 million.
  • The decline in corporate revenue income is estimated to be about $950 million.
  • The decline in individual income tax revenue is estimated to be about $460 million.
  • The state's budget was originally projected to collect more revenue than allowed under the Taxpayer's Bill of Rights, which is now wiped out by the revenue hit.
  • Democrats hold a 43-22 majority in the House and a 23-12 majority in the Senate.

Sources:

  • Quentin Young/Colorado Newsline
  • Sen. Jeff Bridges
  • Rep. Carlos Barron
  • House Speaker Julie McCluskie
  • Emily Sirota
  • Colorado Newsline
  • https://coloradonewsline.com/subscribe
  • https://leg.colorado.gov/2025-special-session-bills-authorized-sponsor-pre-release
  • https://coloradonewsline.com/2025/07/04/repub/fourth-of-july-trump-signs-bill/