With the Denver Broncos playing well this season, the grimmest show in Colorado can be found in a small room near the state Capitol.
That is where the legislature’s Joint Budget Committee has been tasked with cutting hundreds of millions of dollars — even as much as $1 billion — from the state’s $16 billion general fund budget. State agency after state agency has filed through the committee’s doors this month to present their own budgets, to ask for additional money and to brace for the bruising refrain that has greeted those who have come before them.
“This is the conversation from now on: ‘What programs are we going to cut?’ ” Sen. Jeff Bridges, a Greenwood Village Democrat and the committee’s chairman, told leaders from the state Department of Labor and Employment on Dec. 12. “That’s this year in a major way. It’s probably next year in less of a way.”
“We all need to start thinking about which people you want turned away,” Sen. Barbara Kirkmeyer, a Brighton Republican, told her colleagues during a tense Medicaid hearing.
Even nominally happy occasions get snuffed out. Earlier this month, a legislator who isn’t on the committee sat in on a budget hearing. Rep. Emily Sirota, a Democratic committee member, called out a greeting and, realizing it was the legislator’s birthday, Bridges wondered aloud if the room should sing “Happy Birthday.”
“No,” Kirkmeyer interjected immediately, and the meeting continued apace.
Such is the new cadence of the Joint Budget Committee, which has been meeting ahead of the start of the legislature’s 2025 session on Jan. 8. Charged with allocating pennies and billions of dollars, its six members — four Democrats and two Republicans — wield more power than any other committee in the Capitol. That’s true even in normal years, when it helps determine how much money is available for new programs and ensures the state budget is balanced.
The work is often a game of tradeoffs: Funding one program means another must shrink or be left on the legislature’s cutting room floor, and the committee must at times shift money from one pot to the next to ensure the state meets its obligations.
Now, the bleak fiscal reality has heightened those dynamics. The committee isn’t identifying how much the legislature has to spend. Instead, it must cut, and cut, and cut before it delivers the next fiscal year’s budget to the full legislature in late March.
The committee’s members have told their colleagues in the Capitol not to run bills that cost any money. They’ve also told the agencies that have trudged before them to come back with reductions and with ideas on which programs — including those passed by the legislature — could be abandoned entirely.
Contending with TABOR, Medicaid costs
Unlike in previous tense budget years, including the early days of the COVID-19 pandemic, the current budget fears are not caused by a faltering economy. Indeed, in a budget hearing Thursday, state officials described the stability of Colorado’s economy and the low risk of a recession in the near future.
Instead, the hole in the 2025-26 budget, for the year that starts in July, has been dug by restrictions in the Taxpayer’s Bill of Rights, high Medicaid costs and the end of federal pandemic stimulus dollars. The committee will now decide which programs get gouged and which get winged. Cutting one program may mean avoiding deeper cuts to others that make up the largest shares of the state budget — Medicaid, K-12 schools and higher education — and which lawmakers will be loath to slash.
But those services dominate the budget so much — Medicaid and K-12 school funding account for roughly two-thirds of state general fund dollars, Bridges said — that insulating classrooms, rural hospitals or front-line health care providers will likely be impossible. Not only does Medicaid provide insurance for a quarter of the state’s population, by Bridge’s estimates, but it also serves as a significant financial foundation for various parts of Colorado’s health care infrastructure.
The situation is further compounded by the uncertain posture of the federal government under the coming second Trump administration.
Kirkmeyer has also argued that the budget problem has been fueled by the growth of state government in recent years. She regularly peppers state agencies’ representatives with stats about how their staffs and budgets have grown, and she’s instructed them to come back with proposals that would cut 10% of their expenditures.
“We are over-expended,” Kirkmeyer told Labor Department officials. “So programs are just going to have to be cut. We need you to find 10% from that. Not a 1.5% increase — we need you to be looking for a 10% decrease of your general fund.”
Joseph Barela, the agency’s executive director, told the committee that the agency grew because voters approved paid family leave, a large program that required significant staffing. If the department cut 10%, he warned, it would lose even more in federal funding that helps serve Coloradans with disabilities.
That would hurt, he said.
“Cutting health care for a quarter of Coloradans also hurts,” Bridges replied, referring to Medicaid enrollment. Bridges told Barela to give the committee “the menu” of potential cuts, and the committee would take it from there.
“It’s a little bit unnerving,” Sen.-elect Judy Amabile, a Boulder Democrat and the committee’s newest member, told The Denver Post. Agencies, lobbyists, advocates, members of the public — all beg and plead with the committee not to cut their programs or services.
Some are so small that she wonders if they’re even worth cutting. Ultimately, she said, the committee will have to choose between programs and services “that are nice to have, but not life or death. And those are the kinds of choices we’re going to have to make.”
“It’s cutting muscle and bone”
Sitting in the hallway Thursday morning, Bridges described the meetings as “grim.”
The committee members had just learned that the budget hole was on track to be smaller than they’d thought, though it was still projected at more than $670 million. That was a ray of sunshine — though Bridges noted that voters in November had passed Proposition 130, a conservative-backed initiative that requires the legislature to provide $350 million in additional money for law enforcement. The measure did not identify — let alone provide — a funding source.
The money can be dolled out over a period of years, but the mandate also meant the shortfall was still roughly $1 billion, as analysts had earlier projected back in September before Thursday’s revision.
“Getting a billion dollars out of $16 billion. Man,” Bridges said.
He shook his head and defended state government as lean and efficient.
“It’s not cutting fat. It’s cutting muscle and bone. And limbs.”
The committee, he said, was trying to get every state agency to share in the pain. Gov. Jared Polis’ draft budget, which serves as something between a suggestion and scratch paper for the committee, proposed slow-rolling new education funding promises and some Medicaid provider rate increases.
Polis’ office also recommended privatizing Pinnacol Assurance, the state’s workers compensation insurer and a quasi-governmental entity.
Members of the committee — let alone their colleagues in the broader legislature — are leery of all of those proposals, as Bridges told the governor’s staff repeatedly Thursday morning. But the budget must be balanced, and the cuts have to come from somewhere.
Even if the committee nixed entire departments, that would be little more than “a rounding error on that billion dollars,” Bridges said in an interview. “But we have to show that we are cutting as much as we possibly can before we even contemplate cuts to things like (education and Medicaid).”
A few steps away, Kirkmeyer showed a graph from 2021. It warned of a structural budget deficit, in which the state government grows more quickly than its budget can support.
It’s now led to this moment, she said, where lawmakers are contemplating cuts of tens of millions of dollars to education and human services, and where even keeping funding flat would hamstring departments that can’t keep up with rising needs.
She has been hostile to Polis’ budget proposal for its reliance on one-time money and proposed cuts to legislative priorities. She characterized it as a “shell game” during Thursday’s budget forecast hearing with Mark Ferrandino, Polis’ budget director.
Ferrandino vehemently disputed that characterization.
“This budget is still not serious to me,” Kirkmeyer said in an interview. “It’s still not worth the paper it’s written on, to me. If they’re not going to make any major changes (early next year), I’m all for taking it and just throwing it in the trash. Let’s get serious here.”
Staff writer Nick Coltrain contributed to this story.
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