The ongoing reverberations of the Trump administration's tariffs are still being felt across the nation, with the economic fallout becoming increasingly apparent. In a recent forecast released by Governor Polis and the Office of State Planning and Budget (OSPB), it was detailed how these tariffs continue to strain the economy, bringing higher costs to consumers, hampering job markets, and contributing to steeper inflation rates. "Today's forecast again shows that the President's reckless tariff taxes are increasing costs on consumers, sabotaging our economy, tightening the job market, and driving up inflation," Governor Polis stated, as per the Colorado Governor's Office.
While Colorado is seemingly riding out the storm better than other states, with a somewhat buoyant job market and stronger economic growth, Governor Polis noted that families are being backed into a corner with escalating financial burdens. This has forced many to make difficult and often compromising budget choices at home for not just themselves but also their families. Sadly, the forecast is anything but rosy. As per OSPB's projections, revenue growth is anticipated to drop below the TABOR cap in FY26, adversely affecting the Family Affordability and Earned Income Tax Credits, which are likely to be discontinued in Tax Year 2026, albeit with an expected return in the following year.
Moreover, the Opportunity Now Tax Credits, which were initiated through HB24-1365, are expected to be reduced by 50% for Tax Year 2026. In the face of these revenue decreases, the OSPB is projecting TABOR surpluses, albeit modest ones, to the tune of $363.9 million and $721.1 million for the fiscal years 2026-27 and 2027-28, respectively. Encouragingly, thanks to legislative special session maneuvers, executive actions, and updated forecast projections, a relatively healthy 13.6% reserve is projected for FY2025-26.
