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8 big things you need to know about Colorado’s $34 billion state budget

The legislature has hundreds of millions more to spend than it was anticipating after Colorado’s economy fared better than expected during the pandemic.

Colorado state representatives and staff mingle in the Colorado Capitol's House chambers during the first day of Colorado's special legislative session on Monday, Nov. 30, 2020. (Andy Colwell, Special to The Colorado Sun)

Colorado lawmakers this week began debating the state’s $34.1 billion budget, which helps chart a path out of the coronavirus crisis and sets aside millions of dollars for equity-related initiatives and a historic sum for future economic downturns.

The legislature was able to reverse funding cuts made as the pandemic descended upon the state last year, and lawmakers now have hundreds of millions more to spend than they were anticipating because Colorado’s economy fared better than expected during the pandemic. 

State Sen. Dominick Moreno, D-Commerce City. (Handout)

“It is an interesting time for the budget given the gravity and the extent of the cuts that were necessitated last year compared to this year,” said Sen. Dominick Moreno, a Commerce City Democrat and chair of the Joint Budget Committee, which writes the budget. “It turns out those (cuts) were not only not necessary, but that we could actually build upon restoring those reductions and be able to allocate additional resources for the state’s most pressing needs.”

The bipartisan budget measure, Senate Bill 205, is expected to land on the Senate floor on Thursday before heading to the House next week. 

We talked with state budget writers and combed through the budget bill to determine what you need to know about the spending:

MORE: Colorado’s state budget drives decisions that affect us all, but it’s long and complicated. We’re here to help.


$3.8 billion

That’s how much more money lawmakers are spending in the 2021-22 fiscal year than they did for the current fiscal year, which ends June 30. 

The 2021-22 fiscal year budget is $34.1 billion. The budget was $30.3 billion for the current fiscal year. In the 2019-20 fiscal year, the budget was $30.5 billion.

Part of the reason the budget is so much larger is because lawmakers last year made cuts that ultimately were unnecessary. The leftover money is reflected in the new budget and allowed lawmakers to “fill the gap temporarily.” 

Sen. Bob Rankin, a Carbondale Republican who sits on the Joint Budget Committee, said he’s concerned about how much money was available for lawmakers to spend.

“My least favorite part is we had too much money,” he said. “I know that sounds weird, but I’m still a fiscal conservative and I just have a hard time dealing with (having) so much money that we just cannot be frugal. We cannot be good stewards of money because there’s too much of it.”

State Sen. Bob Rankin, R-Carbondale, joins members and guests in the senate chambers as the second regular session of the 72nd Colorado General Assembly convenes at the Colorado Capitol on Jan. 8, 2020 in Denver. (Kathryn Scott, Special to The Colorado Sun)

That said, this extra revenue is a one-time boon and lawmakers can’t rely on so much money in future years.

“This budget does prepare us for the reality that revenues are picking back up,” Moreno said. “They’re not quite to a level where they can sustain a budget that we were at prior to the pandemic.”

The American Rescue Plan

Colorado’s state coffers received $3.9 billion as part of Congress’ recently passed coronavirus stimulus bill, called the American Rescue Plan

That money, however, is not reflected in the total amount of the state’s 2021-22 budget. That’s because lawmakers are still working to determine how to spend the money. A statewide listening tour is underway for people who’d like to submit ideas.

Lawmakers are taking that cash infusion into account, though, as they think through their spending priorities. 

$800 million for a state stimulus package

Colorado’s new budget sets aside $800 million — up from the $700 million initially planned — for a package of bills aimed at helping people weather the lasting economic and health effects of the coronavirus crisis. 

The legislation is still being rolled out, but the largest chunk of spending will be on infrastructure projects, including pricey repairs to the Eisenhower-Johnson Memorial Tunnels on Interstate 70.

The Eisenhower-Johnson Memorial Tunnels. (Jesse Paul, The Colorado Sun)

House Speaker Alec Garnett said a bill introduced this week will allow restaurants to keep up to $70,000 a month in what they would normally owe to the state from sales tax in the coming summer months.

“Those months are key,” said Garnett, a Denver Democrat. “As the weather continues to warm up, as people continue to get vaccinated (you’ll) start to see a lot more economic activity.”

Garnett also touted a measure that will help the state attract conferences and events back to Colorado to spur economic activity on “main streets across the state.”

$480 million for the negative factor

The negative factor, also known as the budget stabilization factor, is Colorado’s annual K-12 school funding shortfall. It was created during the Great Recession to allow state lawmakers to legally withhold money owed to school districts despite funding requirements in the Colorado Constitution. 

State Sen. Chris Hansen, a Denver Democrat, said the $480 million being set aside in the budget next fiscal year for the negative factor will cover about half of what’s owed to schools next year. The rest will come from a $1.1 billion infusion from the American Rescue Plan.

“We have essentially wiped out the negative factor for the next two (fiscal) years,” Hansen said, explaining that he’s hopeful the money will allow schools to catch up children who have fallen behind because of COVID-19.

MORE: A guide to how Amendment 23, “the budget stabilization factor” and “the negative factor” shape education spending in Colorado

Hansen said lawmakers now need to look toward fiscal years 2023-24 and 2024-25 and how to tackle the negative factor in those years. Colorado lawmakers will still owe schools at least $572 million in those years.

The budget would also set aside $100 million for the state education fund as a rainy day pool to be drawn from in future years. 

Chalkbeat reports that the budget also calls for the state to spend $5 billion on K-12 education, which means schools will get about $7.8 billion when districts add in their own tax revenue. The sum represents a nearly 9% increase over the current fiscal year, translating into an average per-pupil allocation for districts of $8,857.

A 3% raise for state employees

The budget calls for giving Colorado’s roughly 30,000 state employees a 3% raise, which is more than the 2.05% raise proposed by Gov. Jared Polis.

Why the higher amount?

“We looked at the inflation numbers and they were above 2.5%,” Hansen said. “And we had a situation where the salary survey was showing that state employees were significantly below market.”

Colorado WINS, the union representing state employees, said it is pleased with the raise.

“We’re glad that it’s there,” said Hilary Glasgow, who leads Colorado WINS. “We were glad for the 3%.”

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The budget also restores the legislature’s $225 million annual distribution to the Public Employees’ Retirement Association, the state employees’ pension fund.

Lawmakers are putting off making up for the slashed spending for the current fiscal year because PERA is in better shape than expected and they feel it can wait for the infusion. The legislature is, however, setting aside money from this year’s windfall for PERA that can be tapped even further down the line.

“We actually walked away, on top of that, with about $380 million to meet the state’s future PERA obligation,” which will take pressure off of future legislatures, Moreno said.

“Unheard of” reserve savings

The budget sets aside about $1.75 billion for Colorado’s reserve fund, which is there to help lawmakers deal with economic downturns or unexpected state expenses. 

“I think a 13.5% reserve is unheard of,” Moreno said. “My entire time in the Capitol has been single digits.”

Hansen called the savings “historic.”

Colorado state Sen. Chris Hansen, D-Denver, leads the Senate Appropriations Committee on the first day of Colorado’s 73rd legislative session at the Colorado State Capitol in Denver on Wednesday, Jan. 13, 2021. (Andy Colwell, Special to The Colorado Sun)

“We haven’t had that level of reserves in a very long time,” he said. “I don’t know the exact year, but it’s been decades.”

In the 2022-23 fiscal year, lawmakers are planning to go even further with a 15% budget reserve. Hansen thinks it’s needed to contend with the “massive amount of economic uncertainty right now.” 

$20 million more for people with developmental disabilities

One of the most popular budget items among the six members of the Joint Budget Committee is the $20 million line item to create more than 500 new around-the-clock care slots for people with developmental disabilities

“That buys about a quarter of the people who were waiting for state services on the (intellectual disabilities) waitlist,” Hansen said. “I think that’s an important highlight.”

Rankin said that’s his favorite part of the 2021-22 budget.

“I think you’ll hear that from a lot of us,” he said.

Millions for equity initiatives

State budget writers made equity a big part of their spending plans for the next fiscal year. While many of the initiatives have yet to be unveiled as part of the $800 million state stimulus package, lawmakers are highlighting one higher education initiative as proof of their commitment. 

The budget sends about $100 million extra to the state’s colleges and universities to help first-generation, underrepresented and Pell Grant-eligible students.  

“Those are the students who are having the most difficulty staying in school and completing” their degrees, Hansen said.

The spending comes after lawmakers cut general fund contributions by 58% for the current fiscal year. The new budget calls for restoring those cuts, as well as the additional $100 million.

The also legislature is allowing tuition to rise by as much as 3% for students at all state-run colleges and universities but the University of Northern Colorado, which is authorized to hike tuition by 7%.

CORRECTION: This story was updated at 12:40 p.m. on Wednesday, April 7, 2021, to correct that the legislature is restoring its $225 million payment to the Public Employees’ Retirement Association in the 2021-22 fiscal year.

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