When Thursday’s special session of the Colorado General Assembly gets underway, the business community will be closely watching to see how lawmakers deal with corporate taxes.

Democrats have blamed federal changes to the corporate tax structure as the culprit behind Colorado’s loss of some $1.2 billion in income tax revenue. Republicans, on the other hand, have insisted that, broadly speaking, Democrats, who are in charge of the state government, failed to heed warnings of a looming deficit and repeatedly overspent.

But another issue is drawing just as much — and maybe even more — attention, and that’s the conversations around artificial intelligence and a round of fixes being proposed to last year’s law that imposed new regulations.

Senate Bill 24-205 made Colorado the first in the nation to deal with consumer issues around what sponsors see is discrimination in artificial intelligence. While Gov. Jared Polis signed the measure last year, he did so with a long list of misgivings. He also asked for changes.

The governor is still waiting, more than a year later, for lawmakers to come to an agreement on those changes.

Efforts during the 2025 session came to a crashing halt in the final days, when Rep. Brianna Titone, D-Arvada, launched a late night filibuster that killed the proposal to delay the implementation of SB 205, which is scheduled to go into effect on Feb. 1, 2026. 

Business groups are now sounding off on what they’d like to see in this week’s special session, both on AI regulation and taxes. While labor organizations and their allies are preparing to back a proposal authored by the legislator behind last year’s regulatory measure.

Both sides have begun to frame the issue. For business, last year’s bill had been rushed, creating more problems than it sought to solve, and any measure this year should avoid those shortcomings. For labor, any changes should adhere to the intent of the original measure — root out “discrimination” in AI algorithms and protect consumers.  

Michael Smith, the Colorado state director for the National Federation of Independent Business, said Wednesday that small business owners are “apprehensive” over the special session. He said the regular session that concluded in May gave small business owners more red tape to navigate, along with a higher risk for litigation. 

He took aim at the changes being proposed in a vendor fee bill proposed by Democrats. The measure, sponsored by Reps. Steven Woodrow and Karen McCormick, would eliminate the fee on sales taxes that retailers can collect to defray the expenses of collecting those fees.

Smith noted the state has given retailers a small allowance for their time and effort to collect sales taxes on behalf of the state.

“Small business owners wear many hats, but an unpaid tax collector should not be one of them,” Smith said.

The special session is unnecessary, according to JJ Ament, president of the Denver Metro Chamber of Commerce.

The chamber plans to keep an eye on any bill that comes forward consistent with the positions they took during the regular session, he said. 

That is likely to focus on fiscal changes, which could include an increase in fees, he said.

Ament said the issue around the budget shortfall is partisan, split between those who believe the deficit was created by H.R. 1 and the contrary view that the state has an overspending problem. 

The chamber intends to make sure that lawmakers aren’t using H.R. 1 as an excuse to do something that would not withstand scrutiny at any other time, Ament said.

The call to deal with health insurance premiums that are expected to rise by 28% statewide is also a worry, Ament said.

The chamber has a lot of members in health care and affordability is a huge topic. But, he said, it’s ironic to hear lawmakers say they’ll make health care more affordable by increasing the fee on health insurance policies, as is proposed by a bill that was rumored to raise $100 million through fees on health insurance providers.

The only bill so far proposed is a collaboration between Sen. Kyle Mullica, D-Thornton, and Rep. Kyle Brown, D-Louisville, that would tap the state’s unclaimed property trust fund for about $105 million to cover the premium tax credits, which will expire at the end of the year unless Congress acts to extend them.

Those tax credits are a type of subsidy that lowers the cost of health insurance available through the state’s health insurance exchanges. The funding would also prop up the state’s reinsurance program. 

And then there’s AI regulation.

Ament said the answer to fixing AI “is don’t get into this situation in the first place and don’t pass these bills.”

Ament said businesses have seen a lot of legislation pass where the legislature has ceded its authority to the executive branch.

“We want a bill like this, but we authorize the executive branch to just go figure it out and make up rules,” he said.

That’s how the state got what Ament called unattainable energy regulations. That happened with minimum wage, too, he said.

And now it’s the same for AI, he said. Lawmakers should never have adopted the 2024 bill, he said, adding he’s now hearing that companies are taking a pass on Colorado or even considering leaving the state. 

Instead of the bill serving as a great example of bringing the community together and crafting thoughtful legislation, Colorado rushed to be the first in the nation just so the state could say how innovative it is.

What happened, Ament said, is incredibly damaging to the technology community and that innovation that Colorado claims to support.

With the looming Feb. 1 deadline — the date SB 205 goes into effect — the response seems to be that lawmakers will just figure it out, he said. 

Small businesses can’t afford what’s coming, he added, and yet these bills apply to them.

The business chamber leader said the state is starting with the regulatory part before even understanding the technology.

Ament said he believes AI will be “the star of the show,” although whether the solution to the AI law can be worked out in just four to six days is questionable.

“This is the kind of thing that should have been done over the course of a much longer period of time and with much many more stakeholders who actually have experience in doing the things the bill contemplates regulating,” Ament added.

On the other side of the AI issue are labor unions, consumer advocates and Senate Majority Leader Robert Rodriguez, D-Denver. 

Rodriguez’ bill for the special session is dubbed the “Colorado Artificial Intelligence (AI) Sunshine Act.” The coalition backing the bill includes labor unions, the Americans for Civil Liberties Union and a host of consumer and progressive groups.

In a statement Wednesday, the ACLU said Rodriguez’ bill creates “a streamlined framework for regulating emerging technology and cuts red tape for Colorado businesses and public agencies.”

“It would also counteract efforts to pass the Big Tech Immunity Act, which would leave Coloradans vulnerable to abuse and discrimination by algorithmic systems,” the ACLU said. 

Rodriguez said the bill is the culmination of two years of work, with the hope that both consumers and industry will “trust in the system.”

The Consumer Technology Association wrote to Rodriguez on Wednesday, outlining its concerns. The group said it appreciates the removal of a private right of action and delegation of enforcement to the Attorney General.

But the bill raises serious compliance issues that would create legal uncertainty for businesses of all sizes, with “small businesses forced to pay unsustainable compliance costs and still not have any clarity as to whether they could face enforcement,” the group said.

There’s also the potential that some aspects are not technologically feasible, such as a requirement to disclose 20 personal characteristics that most influenced a decision involving AI, the group said.