Colorado governor cuts Medicaid, pulls $100M in affordable housing funds to help close state budget gap
Jared Polis plans to cut and redirect around $250 million and tap into budget reserves to plug the remainder of the state’s $800-million deficit
Robert Tann/The Aspen Times
Colorado Gov. Jared Polis is cutting Medicaid reimbursement rates and redirecting more than $100 million in affordable housing funds as part of his plan to close the state’s budget deficit.
The announcement on Thursday, Aug. 28 comes two days after lawmakers wrapped up a special session in which they passed a series of tax changes that are projected to raise $250 million in new revenue to help with the state’s shortfall.
The roughly $800-million deficit was caused by tax code changes under the sweeping megabill passed in July by congressional Republicans and signed into law by President Donald Trump.
While the legislature was called back to the Capitol to raise revenue, lawmakers did not approve any spending cuts and instead empowered Polis to make those decisions himself. They did pass a measure, Senate Bill 1, that requires the governor to notify the legislature’s Joint Budget Committee of any planned spending reductions.
The governor’s office on Thursday submitted its plan to the budget committee detailing $102 million in spending cuts and $147 million in redirected funds for the current fiscal year. Polis also plans to use more than $300 million from the state’s reserve to plug the remaining budget hole.
“It is imperative to act quickly to reduce spending,” Mark Ferrandino, the governor’s director of State Planning and Budgeting, wrote in a letter to the Joint Budget Committee. “In making this plan, we focused on specific line item reductions that can be made with the least possible impact to state programs and services, and not across-the-board cuts that may have significant unintended consequences for Coloradans.”
Polis’s spending cuts were made through an executive order that takes effect on Sept. 1.
The majority of spending cuts will be made to the Department of Health Care Policy & Financing, which oversees the state’s Medicaid program. The department is set to lose more than $79 million, with around half of that coming from cuts to Medicaid reimbursements for health care providers.
The governor will also redirect $105 million of Proposition 123 funds, which provide grants and loans to help local communities build affordable housing. That money will instead go to the general fund to close the budget deficit.
This is a developing story that will be updated.
