Colorado ended 2024 with more money than it owed — a rare and positive turn for state finances. The state had $3.5 billion extra after paying all its bills, giving each taxpayer a surplus of $1,500, according to Truth in Accounting, a nonprofit that tracks government finances.

That’s a big change from just a few years ago. In 2024, Colorado’s financial position improved by $5.9 billion because the state collected more in taxes and federal aid than it spent. One major reason: Colorado’s pension fund made money last year, cutting its unfunded pension debt by $3.2 billion.

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Truth in Accounting gives Colorado a “B” grade for its financial health — one of the better scores among U.S. states.

But not all states are doing as well. California, for example, is in much deeper trouble. The state owes $540.9 billion in bills, but only has $246.8 billion available to pay them — leaving each taxpayer with a burden of $21,800. That’s enough to earn California an “F” grade from Truth in Accounting.

Colorado’s improvement was helped by billions in temporary federal aid during the pandemic. That extra money boosted the state’s ability to pay its bills — but that support is now fading, and additional funding is being cut for programs such as Medicaid and food assistance programs.

If federal funding returns to pre-pandemic levels — adjusted only for inflation — Colorado could lose $7.2 billion in federal money, or about 14 percent of its expected spending. That could make it harder to keep schools open, roads repaired, and public services running.

“Colorado made progress in 2024,” the report says. “But as federal aid diminishes, future funding may return to more typical levels.”

Compared with other western states, Colorado is doing better than California but may face similar pressures as Arizona, Nevada, and New Mexico — all of which rely heavily on federal funds and have large pension debts.

Report Recommendations

Truth in Accounting’s report did make recommendations about state reporting. It says state financial reports should be easy to find online, released within 100 days of the year-end, and written in a clear way so regular people can understand them. The group says governments should stop using confusing accounting tricks and focus on real numbers — like how much money is actually available to pay bills.

Editor’s note: Portions of this article have been augmented with the assistance of Large Language Models for analysis, with human review, editing, and original material.