In a recent episode of Independence Institute’s* public affairs TV show, Devil’s Advocate, host Jon Caldara and the state’s chief economist, Greg Sobetski, dive deep into Colorado’s more than one billion-dollar budget shortfall, finding, among other things, pandemic-era funding, rising Medicaid costs, and federal tax changes as major culprits.
Sobetski explains that during COVID, Colorado enjoyed a glut of federal aid and higher-than-expected revenues. Rather than using that money for short-term needs, the legislature instead spent down those reserves propping up ongoing spending obligations, leaving lawmakers scrambling to sustain a bigger state budget without the one-time money that had been keeping things afloat.
The two also look at runaway Medicaid spending, with Caldara arguing Colorado expanded the program too far, including able-bodied adults and illegal immigrants, and now risks harming more vulnerable recipients when the inevitable cuts come.
The conversation also looks at Colorado’s tax structure. Because the state uses federal taxable income as the starting point for its own income tax system, recent tax relief passed by Congress automatically reduces Colorado revenue as well.
Another major theme is the Taxpayer’s Bill of Rights (TABOR) amendment and the rise of fees. While Sobetski notes Colorado is not actually hitting the TABOR revenue cap this year, Caldara argues lawmakers have increasingly relied on fees and cash funds that do not require direct voter approval, allowing state government to grow in ways TABOR was meant to restrain..
You can see the entire episode here, or watch it below.
