Polis submits final budget with $1.5 billion gap and Medicaid cuts

Gov. Jared Polis submitted his eighth and final state budget proposal on Monday.

The plan addresses a projected $1.5 billion shortfall for the 2027-28 fiscal year, which begins in July. Polis is leaving office in January, and the next governor will take office before the legislature votes on the final budget. Attorney General Phil Weiser and Victor Marx are the major-party candidates in Tuesday’s gubernatorial race.

The proposal aims to slow the rapid growth of Medicaid spending. Current trends would increase Medicaid costs by 15 percent next year, which is about three times the rate allowed under the Taxpayer’s Bill of Rights. Polis’s plan reduces that growth to 4.3 percent. The program covers roughly one in five low-income residents in the state.

To reach that target, the plan cuts long-term services and eliminates adult dental coverage. It also brings back prior authorization for behavioral health services. Mark Ferrandino, the executive director of the governor’s Office of State Planning and Budgeting, noted that federal changes from the One Big Beautiful Bill Act could cost the state more than $100 million. Those funds could potentially be offset by revenue from the state’s universal free school meals program.

Voters approved changes in 2025 that lower deductions for high earners and raise the revenue limit for the school meals program. Officials estimate that about $30 million in expected revenue must be refunded to taxpayers if the cap is not raised again. Polis wants lawmakers to place a measure on the November 2027 ballot to increase that limit.

Education funding sees an increase in this budget. The plan adds $125 million to K-12 general fund dollars to support the new school funding formula passed in 2024. The proposal also includes a plan to privatize Pinnacol Assurance, the state’s workers’ compensation insurer of last resort. This move could generate $100 million for a new childcare trust fund, a change the legislature has rejected in previous sessions.

Tuesday’s election will influence the final budget numbers. Proposition NN, supported by Democratic lawmakers, would raise about $500 million for K-12 education by allowing the state to keep excess revenue. Amendment 87, backed by liberal groups, would create a graduated income tax that raises rates for higher earners and cuts them for most others. That measure is projected to raise roughly $2 billion in its first year for healthcare, education, and childcare.

Polis supports Proposition NN but opposes Amendment 87. He said he will submit an updated budget proposal on Jan. 2, 2027, to reflect the results of the election. That date is more than a week before the new governor is sworn in.