Colorado Governor Jared Polis signed the state’s $43.9 billion budget for the upcoming fiscal year on Monday, culminating nearly a year’s worth of work to craft a spending plan that appropriately funds public education and Medicaid while cutting enough program spending to fill a billion-dollar gap.

“A lot of hours and time went into writing this document. This balanced, bipartisan budget holds strong reserves for an uncertain future. It makes smart investments to protect what matters most, including education, public safety and health care,” Polis said during a signing ceremony at the Governor’s Residence in Denver.

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The budget includes about $16 billion in general fund spending, the portion of the budget over which the Legislature has the most control. The new fiscal year begins in July.

The tight budget conditions were partially a product of ballooning Medicaid costs within the state’s Department of Health Care Policy and Financing and slowing inflation, which impacts how much tax revenue the state is allowed to retain and spend under the state constitution. A cap set by the Taxpayer’s Bill of Rights will increase by about 3.6 percent next year but will be outpaced by health care costs.

That means the six bipartisan members of the powerful Joint Budget Committee had to figure out what to cut in order to create the constitutionally-required balanced budget.

“This is one of the most complicated budgets we have ever put together,” JBC Chair Senator Jeff Bridges, an Arapahoe County Democrat, said.

Over 60 companion bills ran alongside the primary budget bill, known colloquially as the “long bill,” to shift spending and change state law to balance everything. Polis signed those last week.

More difficulties in future years

The budget makes spending reductions in about a dozen state departments.

One move delays about $70 million this year and $56 million next year in planned transportation spending. Another eliminates about $7 million for the Revitalizing Main Street program and over $70 million in awarded, though not under contract, grants for small-scale infrastructure improvements.

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The budget also cuts or reduces many recently enacted programs, such as a Kidney Disease Task Force, free phone calls for incarcerated people, and a bullying-prevention effort in the Department of Education.

There are also instances where the budget bumps funding, including $150 million more to public schools and $21.7 million to the Child Care Assistance Program. It includes a 2.5 percent across-the-board salary increase for state employees and a 1.6 percent increase in the state reimbursement for Medicaid providers.

The budget funds the state’s universal free school meal program, approved by voters in 2022, until the end of the year. After that, the program’s financial future could be left to voters again if the Legislature refers to the fall ballot a measure asking to keep additional tax money to pay for the unexpected demand.

Lawmakers expect the difficult budget circumstances to continue in the upcoming years. Some attribute that to the constitutional limit of how much tax revenue the state can keep, and others say it is a spending problem that leads to a structural issue.

“You don’t get out of a structural deficit in a one-year budget. This is a two-, three- and four-year cycle that we have to work on and make sure that we are doing our due diligence,” said Senator Barbara Kirkmeyer, a Weld County Republican.

“We had over $351 million of one-time spending again this year. That’s not good,” she said.

This year’s budget constraints left little room for any new programs and legislation that included spending.

The House voted 44-21 and the Senate voted 22-11 to approve the budget. The JBC’s two Republican members joined Democrats to vote in favor.