It’s Back to Normal for the Colorado State Budget, and That’s Not Good

As the country entered the fourth year of the COVID-19 pandemic, life for many people is “back to normal.”

Colorado legislators talked about getting back to normal, too, especially when it came to the state budget. The trouble is, “normal” for the state budget isn’t good.

The state government received billions of dollars in emergency aid from Congress during the height of the pandemic. That money allowed the legislature to make big investments in behavioral health, housing, highways, and economic development. 

Legislators elected since 2021 have not had to deal with a normal budget — one that required a last-minute scramble to balance and forced lawmakers to pare back some of their big plans. 

Still, the Joint Budget Committee found ways to increase funds for many health and social issues.

Here’s a look at the 2024-25 state budget highlights for health and social programs. The legislature is expected to pass the budget (House Bill 1430) by next week.

Normal Pressures

Next year’s state budget adds up to $42.9 billion. Of that, $16.2 billion is in the general fund — the part of the budget that legislators have the most control over. But even the general fund is mostly dictated by circumstances that legislators can’t control — namely, growing costs in schools and caseloads for health and social agencies.

Medicaid. Medicaid and Child Health Plan Plus are getting an extra half a billion dollars to pay for the increasing costs of medical care. That’s a big number, but each of the past two years, medical costs have increased by more than $300 million.

School funding. For the first time in 15 years, the legislature is fully funding K-12 schools at the level voters intended. The legislature and Governor Jared Polis added $526 million to school spending to get rid of the “budget stabilization factor,” which was an ongoing cut to school funding that began with the Great Recession — before most Colorado schoolchildren were born.

What Got Squeezed

Provider rates. Legislators were determined to raise the rates that the state pays providers in its health and social programs — doctors, caseworkers, therapists, and others. Polis had requested a 1% increase, with more for select providers. Legislators aimed for a 2.5% increase across the board, but they had to cut it back to 2% when the forecast for economic growth came in worse than expected. Colorado’s Medicaid program pays providers 81% of the rates they get from Medicare, according to 2019 data from the Kaiser Family Foundation. That was above the national average but only 20th highest among the states.

Autism benefit. Legislators had initially voted to add an autism benefit to the Child Health Plan Plus program, but they had to back away from the plan when revenue projections came in low. They did add more reimbursement for autism providers in Medicaid, though.

School meals. Voters approved free school lunches for all children in the 2022 election. But funding fell far short of what was needed. As a result, the budget borrows money from the State Education Fund — the savings account for schools — and cut back on grants to boost salaries in school cafeterias and buy fresh, local food. The shortfall could continue to be a problem in future years, too.

Marijuana-funded programs. Many public health and education programs rely on marijuana taxes. But that tax revenue is dropping fast, and no one quite understands why. Tax revenue peaked at $202 million in 2020-21, but it has since fallen by more than $60 million. Colorado used to be a national destination for marijuana, but prices are falling and 22 now states allow over-the-counter pot sales. Marijuana taxes helped many health programs survive when their prior funding source, tobacco taxes, dropped. If marijuana tax revenue continues to fall, Colorado will need to rethink how it pays for crucial items such as substance use prevention and treatment. 

What Got Funded

Despite the tight budget, legislators were able to pick some winners and respond to some urgent needs.

Public health. The budget adds $11 million for local public health agencies and nearly $6 million for the state Division of Disease Control and Public Health Response. This new money builds on renewed investments the legislature made in public health during the pandemic.

Primary care. The budget sets aside $13 million for primary care providers — part of the legislature’s interest in recent years in improving health and cutting costs through primary care.

Immigrants. School districts will get an extra $24 million to handle higher enrollment from an increasing number of immigrants.

Off-budget bills. Next week, the Appropriations Committees in each chamber will start voting on long lists of bills whose price tags have kept them bottled up until the budget passed. Those committees will have about $91 million to spend, which is not enough to fund all the bills on the agenda.

All in all, it’s a year of opportunities, crises, surging demands, and tough choices. In other words, a normal year.