When Colorado lawmakers return from their holiday break and start a new legislative session, they’ll have to come up with a way to fix a massive state budget shortfall.
The latest projection shows the state will face a nearly $700 million shortfall. That’s a slight improvement over an earlier forecast which estimated the shortfall would be nearly $1 billion.
Colorado Gov. Jared Polis attributed the shortfall to a combination of declining inflation and increasing Medicaid expenses.
Polis said while lower inflation is good, it impacts the growth of the state budget. He said lower inflation means smaller increases in state spending.
The governor said costs for Medicaid have been higher than expected.
“That was really due to the sort of unprecedented Medicaid expansion roll off,” Polis said. “The number of people is about what was projected, but the caseload is higher.”
Medicaid accounts for 36% of the state’s total operating budget and 32 percent of General Fund spending, according to the governor.