Explore the
Colorado State Budget

An in-depth introduction to how the budget is made
and how funds are distributed

Budget Basics

The state legislature determines the state budget.

The Governor, elected officials, and state agencies submit annual budget requests to the legislature.

Colorado must maintain a balanced budget each year, meaning that spending may not exceed the amount of tax and fee revenue that the state collects or saves. In other words, unlike the federal government, the state cannot run a deficit. With voter approval, the state can take on a limited amount of debt by issuing bonds that must be repaid over a set period of time. The last time this occurred was in 1999 when voters approved $1.7 billion in bonds for transportation projects.

The state budget provides funding for state services, including health care, human services, higher education, state roads, and state courts and prisons. Additionally, a portion of the state budget goes to local governments, including school districts, cities, and counties, to help fund K-12 education, local roads, and public assistance programs. While the state provides a portion of this funding, these services are administered at the local government level. Some local governments, such as the Regional Transportation District (RTD), are administered and funded locally without state support.

Learn More About Where Funding Goes

Budget Sources

Three major funds make up about a third of the state’s operating budget.

General Funds

The most flexible source of funding is General Fund revenue, which is used for state programs including education, health care, human services, and corrections. The largest sources of General Fund revenue are income and sales taxes.

Cash Funds

Cash funds are required by law to be spent on certain programs (e.g., vehicle registration fees and the gas tax must be spent on transportation). Most revenue to cash funds comes from fees for government services.

Federal Funds

Federal funds include federal government funding for programs such as K-12 education, transportation, and assistance programs, such as Medicaid and Temporary Assistance for Needy Families.

Budget Timeline

The state fiscal year runs from July 1 through June 30 each year.
The state legislature sets next year’s budget during the current fiscal year.

Budget Preparation

Departments work on their budgets year-round. The Governor, elected officials, and the judicial branch review proposals from the agencies that they oversee and submit their prioritized recommendations to the legislature by November 1. Department budgets for day-to-day operations are presented to the Joint Budget Committee, while major construction and information technology projects are presented to the Capital Development Committee and the Joint Technology Committee. These committees prioritize requests made by departments, and the Joint Budget Committee introduces legislation reflecting its recommendations to the whole state legislature.

Budget bills

The “Long Bill” and other major spending bills are typically introduced in late March. The Long Bill includes funding for most state expenditures. Like other bills, the state legislature amends and votes on the Long Bill before the end of the legislative session, which lasts 120 days from early January to early May. Once a bill is passed, it must be approved by the Governor to become law. The Governor may veto the entire Long Bill or veto funding for specific purposes in the Long Bill (called a “line-item veto”).

All other bills

In addition to budget-related bills, a large portion of the bills introduced by the state legislature also require funding. If a bill becomes law, this funding is added to the funding in the Long Bill and capital budget bills to form the operating and capital budgets.

How Big is the State Budget?

Just looking at dollar amounts, state spending represents about 14% of the state economy. But that isn’t the whole story…

See More (Infographic and Source Data)

What is “the budget”?

When most people talk about the state budget they are referring to the state budget that is set annually by the state legislature. In FY 2020-21, the state budget totals about $36.5 billion.

Of the $36.5 billion, $12.5 billion is from the General Fund, which supports basic state-funded services, such as K-12 education, prisons, courts, and public assistance. Most of the General Fund revenue comes from income and sales taxes. The remainder of the state budget comes from cash funds and federal funds, which must be used for specific purposes as determined by state and federal law.

Other forms of state spending occur outside of the state budget. For example, federal funds for food assistance programs and some federal and private funding for higher education research projects are not “appropriated” by the state legislature.

In addition, some amounts are not spent by the state.

Transfers to Local Governments

About a quarter of state operating funds are allocated to local governments, including school districts, cities, and counties for spending on education, transportation, and human services programs.

Double-Counted Dollars

About $2.2 billion (6.1%) in the FY 2020-21 state operating budget are “reappropriated” funds, meaning these funds are allocated to one state department, but actually spent by another. In a nutshell, these funds are double-counted and can even be counted more than twice in the state budget.

Explore the State Budget

When most people talk about the budget, they are referring to the state budget, which is determined by the state legislature. The state budget includes funding for day-to-day operations and for capital spending. Other forms of state spending are not included in the budget. These funds primarily include federal funds for food assistance programs and some federal and private funding for higher education research projects.

The Operating Budget

The state legislature determines the state operating budget, which is used to fund the day-to-day operations of state government.

The Big Six

A majority of state operating funds go to six state departments

The Department of Health Care Policy and Financing helps pay health and long-term care expenses for low-income and vulnerable populations.

Slice of The State Budget
Department Funding
Where does the funding go?
Major Spending Drivers

The number of people enrolled in Medicaid is the largest driver of state health care spending. Enrollment tends to rise during economic downturns. State and federal law determine who is eligible for Medicaid and what services are covered.

Health care costs are another factor influencing spending. The elderly and people with disabilities typically require higher levels of spending among the populations eligible for Medicaid.

More on the Healthcare Budget

Most of the state funding for K-12 education goes directly to the state’s 178 school districts to share the cost of providing public education with local school districts. The Department of Education also administers licenses and administers a number of education-related programs.

Slice of The State Budget
Department Funding
Where does the funding go?
Major Spending Drivers

State law includes a formula that determines how much is allocated to each school district. This formula accounts for the number of students and cost of living in each school district, and inflationary pressures, among other factors.

More on the School Finance Formula

The state and school districts share the cost of providing public education. The state share comes primarily from the General Fund, while most school district funding comes from property taxes. The state share has increased over time relative to the local share due to:

  • the spending requirements of Amendment 23, which was adopted by voters in 2000 and requires appropriations to increase by enrollment and inflation;
  • the impacts of the Gallagher amendment, which was adopted in 1982 and restricted growth in property taxes by adjusting the portion of residential property value that is subject to taxation (repeal of the amendment in 2020 prevents additional reductions in the future but does not reverse the historic changes);
  • the TABOR Amendment, which imposes limits on state and local government revenue and requires voters to approve new or increased taxes.

More on these Dynamics

Following the 2007-09 recession, the state legislature created the Budget Stabilization Factor to alleviate some of the budgetary pressures facing the state. The Budget Stabilization Factor proportionally reduces the amount of funding across each school district.

More on the education budget

The Department of Higher Education is responsible for administering the state’s colleges and universities.

Slice of The State Budget
Department Funding
Where does the funding go?
Major Spending Drivers

Student enrollment is one driver of spending on higher education. Enrollment tends to rise during economic downturns when job opportunities are limited. Colorado residents make up the largest share of students. Other spending drivers include staff compensation, student support initiatives, and information technology and building costs.

State funding for higher education from the General Fund has declined over time relative to cost of services provided due to General Fund budgetary pressures. State colleges and universities have increased tuition rates to offset reductions in General Fund contributions and rising costs of services. Tuition costs are higher for nonresident students.

More on the Higher Education Budget

The Department of Human Services is responsible for administering and supervising all non-medical public assistance and welfare activities, including:

  • financial and food assistance;
  • child welfare (protection from abuse and neglect) services;
  • rehabilitation, mental health, and substance use treatment programs; and
  • programs for the aging.

The department also inspects and licenses care and treatment facilities for people seeking behavioral health services, people with developmental disabilities, and juvenile offender populations. Additionally, the department operates two psychiatric hospitals, several facilities and group homes for persons with developmental disabilities, and ten institutions for juvenile offenders.

Slice of The State Budget
Department Funding
Where does the funding go?

State operating funds for the department are allocated across the many programs supported by the department.

Major Spending Drivers

Each of the major divisions in the department have unique spending drivers, depending on population growth, eligibility requirements for assistance programs, administrative decisions, and economic conditions, among other factors.

More on the Human Services Budget

The Department of Corrections is responsible for:

  • managing Colorado’s state correctional facilities;
  • supervising the population of offenders in the custody of the department; and
  • developing educational, treatment, and correctional industries programs that have a rehabilitative or therapeutic value for inmates.
Slice of The State Budget
Department Funding
Where does the funding go?
Major Spending Drivers

State employee compensation is the primary factor driving the department’s budget, accounting for 66.3 percent of the $899.8 million General Fund appropriated to the department for FY 2022-23. Appropriations for state employee compensation depend on two key factors: (1) the number of employees utilized to manage the State’s inmate and parole populations, and (2) policy decisions that affect salaries and benefits.

More on the Corrections Budget

The Judicial Department consists of:
  • the state courts;
  • probation, which supervises juvenile and adult offenders who have been sentenced to probation rather than jail or prison; and
  • several agencies that provide legal representation in court for children and low-income populations.
Slice of The State Budget
Department Funding
Where does the funding go?

The largest share of spending goes to the administration of the state’s courts.

Major Spending Drivers

The primary drivers of spending for the department are the number of people on probation and the number and type of court cases. Some court cases, such as felony cases, are much more time-consuming than others.

More on the Judicial Budget

Transportation Funding

Funding for transportation projects is unique. Part of this funding shows up in the operating budget, but that is not the whole story.

For more details about other departments, see the most recent Appropriations Report.

Highways, roads, and other transportation infrastructure are funded through a combination of federal, state, and local government revenue.

State Highway System
  • Federal gas tax
  • State gas tax
  • Vehicle registration fees
  • General Fund transfers
Local Roads
  • State distributions of funding from state and federal sources
  • Specific ownership tax
  • Local sales taxes, property taxes, and fees
Buses & Mass Transit
  • State distributions of funding from state and federal sources
  • Local sales taxes, property taxes, and fees
  • Local sales taxes, property taxes, and fees
  • Federal funding and grants
  • Specific ownership tax
  • Bus and transit fares
More on the transportation budget
Slice of The State Budget
Department Funding

A majority of state funding for transportation comes from cash funds and federal funds. In some years, voters approved bonds to pay for large transportation projects. Additionally, the state has transferred General Funds to transportation in some years. Bonds and transfers fall outside of the state operating budget.

Where does the funding go?

Most of the funding from the state operating budget is allocated for the construction, maintenance, and operations of transportation systems. These dollars help to fund highways, roads, mass transit, and airports throughout the state.

Major Spending Drivers

Most state funding for transportation comes from the gas tax and vehicle registration fees. Revenue from these sources tends to grow with fuel consumption and the state population, instead of general economic trends. As vehicles have become more fuel-efficient and cars are lasting longer, fuel taxes and vehicle registration fees have grown less quickly than vehicle miles traveled.

Rising construction costs and aging roads and bridges also contribute to budgetary pressures for state and local governments.

More on the transportation budget
CDOT Annual Reports & Information

The Capital Budget

In addition to the operating budget, the state has a budget for capital construction and major information technology projects that is determined by the state legislature.

State agencies own nearly 2,400 buildings and 50 million square feet of building space statewide, with a current replacement value of $14.3 billion.

Budget Process

Building projects and repairs are prioritized by the Capital Development Committee, while major information technology projects are reviewed by the Joint Technology Committee. These committees make recommendations to the Joint Budget Committee, which then introduces legislation reflecting recommendations to the whole state legislature.

State Funding

General Fund transfers to the Capital Construction Fund make up a majority of funding for capital projects in most years. In FY 2022-23, most capital projects were funded by the Revenue Loss Restoration Cash Fund from funds originating as federal American Rescue Plan Act dollars.

Where does the funding go?

In recent years, a large share of capital construction funding has gone to state colleges and universities. These projects are partially financed with cash fund revenue from college- and university-related services, such as parking revenues, dorm fees, and athletic event revenues.

Major Spending Drivers

Population growth, demand for state services, the age of state infrastructure, and available funds within the operating budget are major spending drivers for state capital construction and information technology.

State agencies have become more reliant on technology over time, leading to rising information technology costs. Additionally, as buildings age, they require ongoing repairs and maintenance. When funding is put off for building repairs and maintenance, future construction costs tend to be higher.

More on the Capital Budget

Explore State Revenue

Where Do My Taxes and Fees Go?

The taxes and fees for government services that you pay each year fund federal, state, and local government programs. Combining all of these taxes and fees, the graphic below illustrates where the average $1 in taxes and fees goes.

A little less than a quarter of your taxes and fees is collected by the state government.

See More (Infographic & Source Data)

State Revenue Sources

Funding for Colorado’s state budget comes from many different sources, including state taxes and fees, and funding from the federal government.

See More (Infographic & Source Data)

The biggest source of revenue for the state are income taxes and sales taxes. Detailed information about each state tax can be found in the Online Tax Handbook.

Examples of fees include state vehicle registration fees, higher education tuition, state parks fees, and occupational licensing fees.

What is TABOR?

The Taxpayer’s Bill of Rights (TABOR) Amendment is a constitutional amendment approved by voters in 1992.

Voter Approval for Taxes

The TABOR Amendment requires voter approval for tax increases. Fees can be increased by the state legislature without voter approval. Voter approval is also required to increase the TABOR limit, which constrains state revenue from both taxes and fees.

Limits on State Revenue

The TABOR Amendment limits the amount of revenue the state can retain and spend, including revenue from most taxes and some fees. Any revenue that comes in above the limit is refunded to taxpayers. Prior to 2005, revenue was limited to the prior fiscal year’s revenue adjusted by Colorado inflation and population growth.

In 2005, voters approved Referendum C, which allows the state to collect additional revenue up to a capped amount that grows by inflation plus population growth from FY 2007-08 revenue.

Learn More About TABOR

Share Your Ideas & Further Reading

Still Have Questions?

Still have questions about the budget or comments about this website?
E-mail the staff of the Colorado General Assembly: ExploreStateBudget.GA@state.co.us

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