A massive, one-time influx of federal dollars has given Coloradans a glimpse of what a robustly funded state government looks like.
The federal American Rescue Plan Act, passed in the spring of 2021, brought billions of dollars to Colorado, enabling policymakers over the past two years to simultaneously fund long-recognized priorities like housing, the caring economy, behavioral health programs, education, and environmental protection.
But one-time funding is just that: one-time. Rescue funds are an impermanent funding stream that must be expended within the next few years. While these dollars have proven valuable in providing an infusion of needed support, their temporary nature precludes them from solving Colorado’s long-term structural deficit or adequately funding any number of statewide priorities into the future.
If we want real, permanent change, we must prioritize sustainable funding streams and a fairer tax code.
How Much did Colorado receive from the Rescue plan?
More than $9 billion. Nearly $6 billion was specifically earmarked by federal lawmakers for pre-established purposes such as education, services for older adults, public health, child care, and behavioral health. However, over one-third of the funds, approximately $3.83 billion, was left to the discretion of state policymakers and has relatively few restrictions. The money simply has to be appropriated by 2024, expended by 2026, and fall within one of several broad funding categories.
It’s worth noting just how significant a boost these funds are to Colorado’s budget. In fiscal year 2019-2020, the state’s general fund totaled $12 billion. Total federal Rescue Act funds equate to more than three-quarters of that year’s general fund; the less restricted portion of that represents nearly one-third of that discretionary budget.
During the past two years, state lawmakers have disbursed much of the above-mentioned $3.83 billion. Here’s a breakdown of how this money has been allocated:
Workforce development: $200 million
Recognizing COVID-19’s role in accelerating changes in our workforce, the General Assembly put significant funds toward helping workers develop new skills for employment, career pathways, a stronger talent pipeline.
COVID-19 response: $300 million
These dollars were appropriated to the Governor’s office and were spent on COVID-19-related public health services such as vaccinations and testing.
Transportation and infrastructure: $380 million
Legislators put approximately $380 million toward state transportation systems. Importantly, however, Colorado is also expected to receive at least $3.5 billion in infrastructure funding from the federal Infrastructure Investment Jobs Act.
Affordable housing and homeownership: $550 million
The rising cost of housing prompted policymakers to invest substantial dollars into efforts that increase housing affordability such as a revolving loan fund, new grant programs, and eviction-defense services.
Mental and behavioral health: $550 million
COVID-19 exposed deep gaps within our mental and behavioral health systems, which lawmakers sought to address by funding a variety of initiatives such as new youth behavioral health supports, workforce development efforts, and additional residential beds.
Economic recovery and relief: $850 million
With the approximately $850 million set aside for economic recovery and relief, policymakers funded a variety of priorities including services for those experiencing homelessness, childcare, environmental protection, and increased food access.
Restoring lost revenue due to COVID-19: $1 billion
Finally, Colorado lawmakers set aside $1 billion to backfill state revenue lost as a result of COVID-19. While not all of this money has been appropriated, a sizable amount, $600 million, was spent to paydown part of the Unemployment Insurance Trust Fund debt.
All of this is an impermanent solution to a long-term problem.
During the past two years, Colorado has made sizable investments in many important areas. However, it’s not state money that has made these investments possible—it’s one-time federal dollars that eventually will run their course within the next several years. Once federal dollars are gone, we’ll be back in the same pre-Rescue Fund position, where vital issues—like child care, environmental protection, K-12, health care, disaster preparedness, and more—are routinely pitted against one another for tiny, and always inadequate, scraps of state funding.
While federal money won’t solve our long-term funding problems, it has shown us what a more adequately resourced Colorado looks like. It’s shown us, with enough funds, it’s possible to simultaneously invest in multiple priorities and proactively address rising issues in need of attention. Importantly, we have the ability to create this type of Colorado.
To do so, we must enact a smarter, fairer tax code where everyone pays their fair share. By adequately funding our state’s infrastructure we’ll be creating the healthier, more resilient state we all deserve.
Andrea Kuwik, of Lakewood, is senior analyst for The Bell Policy Center.
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