JOINT RELEASE: GOP’s Federal Budget Blows Billion Dollar Hole in State Budget, Slashes Medicaid and Raises Costs for Coloradans

State departments detail newly updated impacts of the federal budget bill passed by the GOP-led Congress, including increases in health care and energy costs for Coloradans and cuts to Medicaid and SNAP that cause Coloradans to lose access to critical safety net programs

DENVER, CO – Today, the Executive Committee of the Legislative Council, comprised of the top legislative leadership of the General Assembly, met to understand the impacts of Congressional Republicans' federal budget bill on Colorado’s state budget. State economists anticipate an over $1 billion hole in the state budget for the current fiscal year that began on July 1. H.R.1 will mean severe cuts to core services and key priorities for Coloradans.

“By pushing through H.R.1, Republicans in Washington recklessly slashed programs that Colorado families count on like Medicaid, food assistance, and children’s health care, and they punted the tough decisions to the states,” said Senate President James Coleman, D-Denver. “With this irresponsible bill, they dealt a billion-dollar blow to our state budget. We have difficult decisions ahead and will do everything we can to minimize the harm, but there’s no avoiding the fact that these cuts will hurt Colorado families.” 

“When the General Assembly adjourned three months ago we had a balanced state budget, and now we don't,” said Speaker Julie McCluskie, D-Dillon. “Republicans' federal budget has blown a billion dollar hole in our state finances and increased health insurance premiums by nearly 40 percent on the Western Slope. Coloradans are now the collateral damage of the GOP's cruel bill, which could have been stopped by just a single Republican in Congress. The consequences for our state are devastating, and Republicans can’t hide the damage their party has caused.”

“Coloradans didn’t choose this. Congressional Republicans – including Lauren Boebert, Jeff Hurd, and Gabe Evans – chose tax giveaways for billionaires and blind loyalty to President Trump over the needs of their own constituents,” said Senate Majority Leader Robert Rodriguez, D-Denver. “In addition to cuts to Medicaid and food assistance, their bill will make life more expensive for all Coloradans, increasing utility bills and health insurance costs and killing jobs. They knew the damage this bill would cause and voted for it anyway, leaving us to deal with the consequences.”

“Plain and simple: Coloradans cannot afford the GOP's budget," said House Majority Leader Monica Duran, D-Wheat Ridge. "Due to the Congressional Republicans' reckless slashing of core services like Medicaid and SNAP, Colorado is in a far worse budget situation than we were when we adjourned session three months ago. As a result, hardworking families, domestic violence survivors, veterans, and others who rely on critical services might be forced to do without. We'll work hard to minimize the fallout in our communities, but this new $1 billion hole in our state budget will require difficult decisions." 

H.R.1 Devastates Colorado’s State Budget

Preliminary estimates from the Office of State Planning and Budgeting (OSPB) indicate a revenue reduction of $1.2 billion this fiscal year (FY26) and a reduction of $679 million in FY27 and future years. Forecasts estimate the state will be $914 million below the TABOR cap in this fiscal year (FY26), meaning that taxpayers will not receive TABOR refunds and there will not be surplus revenue available to pay for the Senior Homestead Exemption in FY27, creating additional pressures on the state General Fund. Lawmakers already had to address a $1.2 billion deficit this year, and now face an additional $1.2 billion hole from H.R.1. 

The GOP budget additionally shifts $170 million in food assistance costs from the federal government onto Colorado, along with hundreds of millions in Medicaid costs as restrictions on provider fee financing phase in. 

Federal Budget Bill Cuts Medicaid, Kicks Coloradans Off Health Insurance, and Raises Premiums

Under H.R.1, up to 193,000 Coloradans are expected to lose Medicaid health insurance coverage, and many more on the individual market will face higher premiums. Eventually, 377,000 Coloradans will be at risk of disenrollment.

The federal budget slashes provider payments and cuts federal funding for Medicaid, Medicaid Expansion, programs for Coloradans with Disabilities, and CHP+ coverage for children and pregnant women. It also reduces reimbursements to Colorado hospitals. These cuts are expected to cost the state Medicaid program $2.5 billion by 2032.

Due to H.R.1 and Congressional Republicans’ refusal to extend enhanced premium tax credits for people who purchase health insurance through the Affordable Care Act marketplace, premiums for private health insurance are forecasted to go up an average of 28 percent with parts of Colorado, especially on the Western Slope, seeing premium increases of 38 percent. Colorado’s successful, bipartisan reinsurance program will be significantly reduced and as a result, every Coloradan will pay more for their health insurance. Connect for Health Colorado estimates these changes could cost Colorado consumers $620 million from reduced tax credits and lead to a loss of coverage for 112,000 Coloradans.

H.R.1’s Impacts Turn Off EITC and FATC for the Next Two Tax Years

Reduced revenue means that the Earned Income Tax Credit (EITC) expansion and the Family Affordability Tax Credit (FATC) will be turned off for the next two tax years, increasing taxes for working people and families and taking money away from some of the most vulnerable Coloradans. With the EITC expansion and the FATC in effect, an average family with two children under six-years-old and an earned income of $50,000 would have received approximately $4,870 in tax credits. With the programs turned off, Colorado workers and families will receive $0.

Changes to SNAP Will Affect 600,000 Coloradans Who Rely on Food Assistance

H.R.1 includes significant reductions to the Supplemental Nutrition Assistance Program (SNAP) and shifts the burden to states. Colorado expects to see $170 million in cuts to SNAP, affecting the more than 600,000 Coloradans who rely on SNAP to afford food for themselves and their families. Many participants will lose food assistance or be forced to overcome new administrative hurdles to demonstrate that they meet narrow work requirements. 

Rollback of Clean Energy Will Result in Higher Costs and Job Losses

H.R.1 rolls back, modifies or completely eliminates tax credits for energy-efficient new homes, residential clean energy and electric vehicles (EVs). An analysis of the final language estimates these policies will result in 1,950 jobs lost and a household income loss of $190 in Colorado, as well as increased energy costs for consumers.

According to the Colorado Energy Office, H.R.1 is projected to increase residential gas prices in Colorado by 3.4 percent by 2029 and electricity prices by up to 10 percent by 2035. Colorado households could see a $500 increase in annual energy costs by 2035.

Tomorrow, Senate and House Democrats will hear from providers and organizations about the impact that Congressional Republicans’ H.R.1 will have on their ability to provide core services to Coloradans.