Amid the festive rush and the chill of a Colorado December, Governor Polis offered a mix of economic tidings to the Joint Budget Committee. In a report from the Governor's Office of State Planning and Budgeting, presented earlier today, Polis was succinct in his assessment: "The White House’s destructive trade wars continue to hurt our economy, skyrocket costs, and worsen inflation ahead of the holidays," as per the Colorado Governor's Office. This drawdown before the season of giving is indeed a bleak backdrop against which Coloradans must secure their fiscal winter wear. The Governor's comments reveal a wider concern for the state's economy caught in the crossfire of national policy.
It was laid bare that the legacy of President Trump's tax policy changes, enshrined in H.R.1, is shaping up to be a weighty burden come FY 2025-26. Due to an expected dip in revenue, falling swiftly below the Taxpayer's Bill of Rights (TABOR) cap, popular tax credits such as the Family Affordability Tax Credit (FATC) and the Earned Income Tax Credit (EITC) expansion have had to be, regrettably, turned off for the tax year 2026. This financial pivot, highlighted by the OSPB estimates, forecasts TABOR surpluses at $208.2 million and $581.1 million for the fiscal years 2026-27 and 2027-28, respectively. The off switch on these tax credits is projected to be felt in early 2027 by Coloradans at tax time, a grim reminder of the interplay between federal actions and the wallets of the everyday citizen.
The foreboding economic forecast does not come without a gleam of prudence, however. The report, detailed on the official state website, showcases Colorado's strategizing for the future with a steadfast approach: a healthy reserve is being maintained to safeguard against fiscal surprises. Governor Polis stated, "Despite this, we are maintaining a healthy reserve to secure Colorado’s fiscal future," as obtained by the Colorado Governor's Office. It's a hint that while the national climate might be fraught with tariff-induced headaches and inflationary fevers, Colorado is setting up the fiscal equivalent of chicken soup for its economic soul.
