With rising Medicaid costs, no dollars set aside for new legislation and dozens of bills still seeking funding, Colorado lawmakers on Wednesday began debating the proposed $46.8 billion budget that is already proving difficult to keep on track.

By the time the main budget measure and its 64 accompanying “orbital” bills — which rely on statutory changes to keep the budget balanced — reached the House floor, the spending plan may already have been out of balance.

Colorado legislators are constitutionally required to adopt a balanced budget each year.

On Tuesday, the House Appropriations Committee rejected a bill that would have repealed Medicaid reimbursement for equine therapy, a change projected to save $181,000.

With that bill failing, the Joint Budget Committee will now have to find another way to account for those savings.

Regarding equine therapy, Sen. Judy Amabile, D-Boulder, one of the six members of the Joint Budget Committee, said it’s possible the legislators didn’t receive accurate cost information and that they will be looking into it.

The state Medicaid program is among the biggest drivers of spending increases in Colorado, and some have pointed to equine therapy and similar expansions of services as among the reasons for that fiscal predicament.

The hike in state Medicaid costs has prompted lawmakers to look into how to better manage benefit applications. Medicaid has been driving overspending both in the 2025-26 fiscal year and in the upcoming state budget that goes into effect on July 1 — the result, some said, of over-utilization of services.

The state program that provides health coverage to low-income residents is also beset by allegations of waste, fraud and abuse, while its leadership has been accused of mismanagement. Congress is investigating the fraud allegations.

Democrats have additionally blamed Congress for Colorado’s fiscal woes, arguing the federal budget changed the revenue equation and caused the state budget to go unbalanced. Republicans, meanwhile, said the state’s fiscal problems resulted from Democrats’ decisions, including refusing to reduce spending even when they knew the state is facing major deficits ahead.

Speaking to reporters on Wednesday, Amabile said that the panel used a lot of one-time funds to balance the state’s spending plan last year.

“This year, we actually had to make real cuts that people are feeling,” she said.

She said the Joint Budget Committee respected each member’s priorities, as they planned the proposed budget, and found compromises.

Amabile also said an upcoming bill will create a centralized way for people to apply for Medicaid and Supplemental Nutrition Assistance Program benefits.

Currently, people apply in individual counties, but that’s not cost-effective for very small counties. The idea, she said, is to examine regional collaboration among counties on benefits applications, an approach that has been successful in other states.

Amabile said the change could also help Colorado lower its SNAP error rate. A high rate of mistakes — both overpayments and underpayments — forces the state to absorb a greater share of the program’s costs. In 2024, Colorado’s error rate stood at 9.97%.

Starting in 2028, states with an error rate above 6% will see their federal SNAP funding cut, and they will have to make up the difference.

Traditionally, the Joint Budget Committee also sets aside money for legislation still moving through the Colorado General Assembly, known as a “set-aside.”

Even in tight budget years, the set-aside has been available, usually around $30 million.

Not this year.

Amabile said lawmakers may be able to figure out how to pay for priority legislation, but there’s no set-aside specifically designated for that purpose.

As of April 7, there are 64 House bills and 43 Senate bills with costs attached to them, totaling more than $3 million in general funds. There are also those seeking cash funds, with the largest being the annual state water projects bill at $221 million. That’s a combination of loans and grants, funded by severance taxes and loan principal payments.

Amabile said she thinks legislators are working to eliminate the price tags on their bills.

The Democrat also mentioned three upcoming bills aimed at reducing the state’s prison population: One focuses on prison population management, another on earned time, and the third on juvenile and young adult reintegration, known as JYACAP.

She noted that the agreement to allow the Department of Corrections to seek funding to lease bed space in private prisons is an alternative to the governor’s request for approval to open another prison.

Amabile couldn’t speculate on whether those changes would occur in time to relieve the strain on prison capacity.

Finally, Amabile addressed the bill that would allow Pinnacol Assurance — the state’s workers’ compensation insurer of last resort — to fully separate from the state.

Amabile, along with McCluskie and fellow JBC member Rep. Rick Taggart, R-Grand Junction, is sponsoring the measure, which has not been introduced.

The draft bill calls for $300 million to be paid to the state, which would be spent on the following:

• $43 million to the general fund to be appropriated for an increase in the medicaid provider rate
• $20 million to the controlled maintenance trust fund
• $40 million to the state affordable housing fund
• $27 million to the general fund for additional temporary funding to the Department of Higher Education. (Higher education’s budget was cut by $11 million in general funds in the 2026-27 budget)
• $100 million to the state education fund
• $20 million to the postsecondary talent cash fund, which was created in the bill
• $50 million to the capital construction fund to be expended for the construction of a state hospital

Whatever is left will go to the state’s general fund reserve.

If the bill passes, would that money be available in 2026-27?

Amabile noted lawmakers can only budget to the current law, but, she said, it is a long shot that the funds would be available in the next fiscal year.