Recently, Gov. Jared Polis’ budget director, Mark Ferrandino, presented to legislators the effect of HR 1, the “Big Beautiful Bill”, on Colorado’s budget. He noted as a result of the bill, the state would have $1.2 billion less in revenue in the next fiscal year than the current one.

In response, Gov. Polis announced he may call a special session of the legislature to address the projected shortfall

The challenge facing the General Assembly and governor related to the state budget is a daunting one. After making substantial cuts in the prior session of more than $1 billion, legislators will once again need to adjust the state budget to align it with anticipated revenues. 

The governor has already taken some steps by instructing state agencies to submit budgets with a 2.5% reduction over the current year. That will help but not be nearly enough to cover the shortfall. Some consideration is given to tapping the state’s Rainy Day Fund but drawing down too much out of that fund could create a problem in the future if the state’s economy takes a downturn or certain emergencies arise that may place demands on that fund.

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The temptation for many lawmakers in these situations is to take actions to make up for the lost revenue to preserve existing programs and services as they are today. This may involve increasing certain fees and creating additional enterprise funds, which do not count against the Taxpayer’s Bill of Rights (TABOR) limit, to offset some of the losses. A second approach voiced by some is to remove or modify TABOR which sets limits regarding the growth of the state budget. That would remove the cap on spending that exists in our Colorado Constitution today. Such a change though would require approval of the voters and there is no guarantee voters would support it. Other possibilities involve staff layoffs, a freeze on hiring, and reductions in travel and curtailing state contracts.

As the General Assembly and governor weigh what actions to take, it would be good for them to consider the Latin phrase, primum non nocere which means “first, do no harm”. This is one of the principal precepts all students in medicine are taught. This phrase simply means a primary obligation for health care professionals is to avoid actions that may cause greater harm to a patient while striving to treat their condition.  

Colorado legislators in their efforts to address the state’s budget problem should adhere to this philosophy. It’s important as our lawmakers rush to consider options to “cure” the budget shortfall they don’t inadvertently inflict more injury or pain on their patients, the public and taxpayers. Increasing a variety of fees on businesses and individuals, when unemployment has risen, inflation is up and many are struggling, is an action that could prove more detrimental than good.

State lawmakers should also be cautious not to take actions that may add to the state’s budget woes. Passing legislation to add new rules or allowing state agencies or commissions to make major modifications to existing ones, requires the state agency or commission to conduct a public rulemaking process.

Few, outside of government insiders, lobbyists and regulatory specialists may understand or appreciate the public rulemaking process and the amount of time and cost involved. Developing and instituting a new rule or making a major modification to an existing one may span months and require hundreds of hours of staff time, possibly from multiple agencies. In many cases state staff from the Attorney General’s Office may also be involved. The overall costs, when fully totaled, may run well into six figures. Add to this the costs to the state to defend the new rule if it is challenged in court which may easily exceed the cost of the rulemaking.

Though a state agency may program funds in their budget for a rulemaking process, estimating the costs of these processes, at best, may be a “swag” and in many cases the costs and time far exceed the estimate. The reason is there are multiple variables and parties involved that can affect the amount of time and effort required. It’s also important to realize these rulemaking processes require substantial staff time and, in an environment where vacancies may not be filled and even layoffs possibly occur, spending time and money on a new rule or regulation doesn’t appear prudent nor make much sense.

Based on the current dire budgetary straits, lawmakers should consider a freeze on rulemaking with the exception being those that represent a minor change to an existing rule or a new one that may be essential due to an imminent hazard to the safety and welfare of the public. Taking this one action that could produce substantial savings for state government and also provide a welcome break to those in the private sector who are struggling to digest the flurry of previous regulations adopted over the past few years.   

State legislators and senior managers of state agencies should also look at this time to make some tough decisions on existing programs such as streamlining, revamping, or even scrapping them. When funds are flush, the tendency is to defer taking such actions. Some of this is due to the difficulty in eliminating even poor programs as certain constituencies who benefit from these programs contact their elected officials and pushback on any changes. In addition, these programs have internal support within the agencies from the staff affected by those cuts and in some cases public employee unions concerned regarding the effect.

Greg Fulton is the president of the Colorado Motor Carriers Association, which represents more than 600 companies directly involved in, and affiliated with trucking in Colorado.