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As Colorado lawmakers face an $850 million budget shortfall in the new legislative session, advocates for people experiencing homelessness say investing in key programs now will actually save the state money.

A new Improving Infrastructure to Reduce Homelessness bill would bring government agencies, service providers and other stakeholders together to create a statewide strategy at no cost to taxpayers. Cathy Alderman, chief communications and public policy officer for the Colorado Coalition for the Homeless, said the measure would also allow local governments to pool resources to create solutions that best fit their regions.

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"We think that those two components are really critical," she said, "because we just need – as the bill title implies – more infrastructure for folks to plug into so that we can all be rowing in the same direction on homelessness resolution and prevention."

Colorado was ranked the ninth richest state in the nation in 2025. The primary driver of Colorado’s budget woes is its Taxpayer's Bill of Rights, or TABOR, a constitutional amendment passed more than three decades ago. TABOR sets strict limits on the amount lawmakers can invest in programs based on inflation and population levels, and makes it much harder to pay for rising health-care costs without cutting other services.

Homelessness continues to increase year over year across Colorado, and Alderman said investments at both the federal and state level are not meeting the scale of the challenge. With rising rents, grocery bills and health-insurance premiums, more people are expected to end up on the streets. One way or another, Alderman said, Colorado will end up spending money.

"We’ll just be spending it on expensive emergency services instead of longer-term solutions like shelter and housing," she said, "which are far more cost effective and are far more effective in actually resolving homelessness."

Alderman noted that Colorado lawmakers could also extend tax credits that incentivize private investments in addressing homelessness, which expire this year. In 2025, those credits brought in more than $25 million for essential services at a cost of slightly more than $6 million.

"That is a small investment of state money to provide that tax credit," she said, "but the benefit is three, sometimes four-fold to the service providers who are providing the work."