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With Colorado facing a $635 million budget shortage, legislators in the Centennial state are primed to go to war with Governor Jared Polis over his suggested cuts.

While state leaders have shown a willingness to find solutions to the budget deficit, the forthcoming months will be characterized by nail biting negotiations and extremely difficult decisions.

Concern has been raised by lawmakers over Governor Polis’ plan to lower Medicaid provider rates. State legislators are concerned that these changes could harm patients and medical professionals, especially following recent improvements to the system.

The changes coincide with difficulties the state has using Medicaid despite a declining enrollment.

The Colorado legislature’s budget drafting body, stung by criticism from the governor over hiking Medicaid provider rates last spring higher than what he wanted, bit back when Gov. Jared Polis met with the committee recently to discuss his 2025-26 budget proposal.

Gov. Jared Polis and members of the Joint Budget Committee locked horns over the size of his proposed cuts. Polis effectively argued that his proposal responsibly makes budget reductions, while lawmakers questioned his decision to fund projects or services — such as landscaping for the governor’s mansion — when the state is practically in “recession” mode when it comes to budgeting.

Feelers coming from the state’s legislators are that the governor’s budget proposal is unserious; while the governor’s budget chief has argued that the proposed budget reduces or eliminates programs that aren’t the best use of dollars.

The budget, as proposed by Polis, cuts $638 million in general fund, including targeted reductions in provider rates and changing the timeline for implementing the state’s new school finance funding formula from six years to seven years. The governor also proposed privatizing Pinnacol Assurance, the state’s workers compensation insurer of “last resort,” a move that would generate about $100 million per year that would go to the state’s pension plan.

The budget, however, isn’t balanced, as noted by The Joint Budget Committee staff earlier this month. That’s because independent state agencies — judicial, attorney general, secretary of state and treasury — submit their budgets independent of the administration. The administration estimated a 3% increase, but, according to JBC Director Craig Harper, the judicial budget request came in at three times that, an increase that put the proposal $50 million out of balance.

Majority of the state lawmakers are questioning if these cuts are the best way to close the budget gap.

There has also been criticism of the governor’s proposal to postpone the adoption of a new school finance system. Some legislators worry that delaying the reforms will make schools more susceptible to unstable funding, particularly in areas experiencing dropping enrollment.

His plan would increase school funding by about $115 million next year, bringing total spending to $9.8 billion. However, district leaders said that would be far less than what they are supposed to get, with school finance advocates calculating schools receiving about $190 million less next year if Polis’ changes are enacted.

Democratic Representative Emily Sirota (L) and Republican Senator Barbara Kirkmeyer (R) have both criticized Governor Polis for his proposed budget cuts. Credit-Coloradopolicits.com

District leaders in the Metro area are growing increasingly concerned that Polis’ budget framework opens up the possibility for the state to find a new way to cut their budgets after lawmakers during the 2024 legislative session eliminated a practice this year that withholds money from schools for other priorities. District leaders say the changes would also exacerbate funding disparities and lead to harmful cuts for students, especially in districts grappling with declining enrollment.

While the Joint Budget Committee and Colorado General Assembly will have the most say on how the state proceeds in terms of the budget, the district likely won’t see a major impact in funding cuts compared to other districts if the proposal goes through.

The current proposal by Polis would also make budget planning difficult and, if passed, would fail to meet the promises made last year by lawmakers.

During the 2024 legislative session, school officials celebrated after lawmakers pushed to invest more in K-12 education.

Lawmakers eliminated the so-called budget stabilization factor after 15 years, which diverted constitutionally-mandated school funding for other priorities.

They also were able to approve a new school funding model that’s expected to boost state spending by $500 million. The law called for phasing the money in over six years and will better distribute state funding based on the types of students districts teach and help rural and smaller districts. The law also changed student enrollment counts from five to four years for the purpose of the budget.

Both Republicans and Democrats have expressed concerns about Polis’ budget proposal.

Republican Senator Barbara Kirkmeyer has criticized the governor for his cuts to schools, while Democratic Representative Emily Sirota has questioned the broader impact of the cuts on public services.

Both sides are worried about the consequences for vulnerable communities and the long-term effects of reducing funding for essential services.

In response, Polis emphasized the need to focus on the largest areas of state spending, such as Medicaid and education, to close the budget gap.

However, lawmakers are suggesting that there may be other ways to balance the budget without making such drastic cuts to these critical areas.

It is anticipated that the discussion surrounding these budget plans would get more heated as the negotiations go on.