Colorado Gov. Jared Polis took action on Thursday to tackle a more than $1 billion dollar budget hole state officials said was caused by provisions in the federal One Big Beautiful Bill Act.
The Democratic governor, who called a special legislative session to address the financial fallout, signed bills and an executive order to close corporate tax loopholes and cut spending in what he called "a balanced approach."
"This special session was necessary to address the threat H.R.1 has on schools, health care and roads, and I'm proud of our partnership with the General Assembly to get this done," he said in a statement.
H.R. 1,
Colorado, along with Oregon, North Dakota, and Iowa are the only states that base their income tax on federal taxable income and have rolling conformity with federal tax changes, making them the most susceptible to federal tax policy changes.
The financial hit for Colorado came just after it started fiscal 2026 on July 1 with a $43.9 billion all-funds budget that includes $16.7 billion in general fund spending after addressing a $1 billion structural deficit.
The use of the state's general fund reserve to close the budget hole will be limited, according to the governor.
"These actions put the state budget on a path to use no more than $328.7 million of the budget reserve, instead of the $783 million originally anticipated," Polis wrote in a letter to the Democratic-controlled legislature. "Under current projections, we will therefore be able to maintain greater than a 13% budget reserve for FY 25-26."
The letter announced Polis'
A hiring freeze Polis announced on Aug. 6 took effect on Wednesday and will remain in place until Dec. 31.
