Governor Jared Polis stood before Colorado’s legislature on January 15, 2026, and celebrated. The state was strong. Childhood poverty had plummeted. Energy costs were down. Tax credits were working.
Twenty-seven days earlier, his own office had eliminated the tax credit he praised. Energy costs were rising. Two executive orders had suspended $742.2 million in appropriations and cut $616.2 million from Medicaid. Legislative Council Staff projected deficits between $691.9 million and $783.1 million.
Here’s what Polis said, and what the documents show.
The Tax Credit That Doesn’t Exist
Polis: “Establishing the Family Affordability Tax Credit, which helped cut child poverty rates by nearly 41%. Today, Colorado boasts the lowest childhood poverty rate in the nation.”
Reality: On December 19, 2025, the Office of State Planning and Budgeting announced the Family Affordability Tax Credit was “turned off for tax year 2026.” Revenue fell below the TABOR cap, automatically eliminating the program. Families earning income in 2026 won’t receive the credit when they file in early 2027.
Polis praised a program his office had killed 27 days earlier.
The Energy Savings That Aren’t Happening
Polis: “Building out low-cost clean energy for more Coloradans to save money on energy bills.”
Reality: The Public Utilities Commission approved a $130.76 million Xcel gas revenue increase on October 25, 2024, adding $4.57 to monthly residential bills. Xcel filed for an electric rate increase on November 21, 2025. The company’s wildfire mitigation plan requires $1.9 billion in spending from 2025 through 2027. PUC documents show on-peak rates run 2.7 times higher than off-peak.
Energy costs are rising.
The Tax Credits Already Eliminated
Polis: “Cutting income taxes three times and property taxes five times while supercharging the earned income and child tax credits.”
Reality: The expanded Earned Income Tax Credit was eliminated December 19, 2025, the same day OSPB turned off the Family Affordability Tax Credit. Both programs ended because revenue dropped below the TABOR cap.
Polis celebrated tax credits his office had eliminated.
The TABOR Refunds That Are Coming Back
Polis: H.R. 1 had “devastating impacts” on Colorado, “gutting our state budget by $1 billion overnight, eliminating Coloradans’ TABOR refunds.”
Reality: OSPB’s December 19 announcement projects TABOR surpluses of $208.2 million in fiscal year 2026-27 and $581.1 million in fiscal year 2027-28. TABOR refunds are not eliminated.
Polis blamed H.R. 1 for eliminating refunds his own office projects will return.
The Budget Reserves That Don’t Exist
Polis: “When I took office, the state’s budget reserves were at 7.25% and today, we’re in the double digits with 13% in the bank.”
Reality: Legislative Council Staff’s June 2025 forecast projects the General Fund will end fiscal year 2025-26 with a 10.6 percent reserve, $691.9 million below the statutory requirement. The December 2024 forecast projected a 14.9 percent reserve, $27.0 million below the requirement, before H.R. 1 passed.
The reserve problem existed before federal action.
The Savings Already Gone
Polis: “We’re saving the average Colorado family of four over $600 dollars a year on income and property taxes, and last year Colorado taxpayers saved nearly $2.5 billion.”
Reality: The two largest tax credit programs Polis enacted—FATC and the expanded EITC—were eliminated December 19, 2025. Whatever savings Coloradans received are gone for tax year 2026.
The Medicaid Crisis He Built
Polis: H.R. 1 was “slashing Medicaid” and causing budget problems.
Reality: HCPF’s Sustainability Framework documents Medicaid cost trends averaged 19 percent annual growth from fiscal year 2021-22 through 2024-25. TABOR limits state revenue growth to 3 to 4 percent annually. Long-term services and supports costs rose 44 percent between fiscal years 2020-21 and 2023-24. U.S. medical inflation ran at approximately 8 percent in 2024 and 2025.
Medicaid costs growing at 19 percent cannot be sustained by revenue growing at 3 to 4 percent. This structural failure existed before Congress passed H.R. 1.
Executive Order D 2025 014, issued August 28, 2025, suspended $742.2 million in appropriations and imposed a hiring freeze. A second order on October 31, 2025, cut $537 million from Health Care Policy and Financing. Provider rates were reduced, service caps imposed, and redetermination periods shortened from twelve months to six months for 375,000 Coloradans.
These cuts were implemented while Polis prepared his celebration.
The “Cover All Coloradans” expansion that began January 1, 2025, extends full Medicaid and Child Health Plan Plus coverage to children and pregnant people without legal immigration status. This expansion adds future costs to 19 percent annual growth that already existed.
The Fraud He Ignored
Polis: H.R. 1 created Colorado’s budget crisis.
Reality: Colorado paid $73 million in fraudulent unemployment benefits during the pandemic. Dead people received $3.9 million. Prisoners collected $5 million. Minors received $102,000. The money has not been recovered.
The Department of Justice indicted seven people in 2024 for a $40 million Medicare and Medicaid fraud scheme. The federal Office of Inspector General found Colorado paid $7.3 million to insurers for nearly 9,000 dead Medicaid enrollees, including 4,837 whose deaths were already in state systems.
The Colorado Department of Transportation paid $158.7 million for work on expired contracts. The State Auditor found the Judicial Branch committed occupational fraud, conducted apparently illegal transactions, and misused public funds.
State agencies hoard cash in violation of law. The Judicial Department holds $12.8 million in excess reserves. The Division of Professions maintains $8 million in a fund out of compliance for six years. The Department of Early Childhood announced 27,000 children would lose care without $91 million in emergency funding while sitting on $76 million in fund balances.
Obsolete programs continue drawing appropriations. The Title Insurance Commission made zero recommendations in seven years. The Veterinary Pharmaceutical Advisory Committee hasn’t met since 2021.
The Department of Local Affairs omitted $495 million from federal reporting. The Department of Labor overstated estimates by $266.2 million. The State Controller’s office had a $663.4 million misstatement.
The documented fraud and waste totals $555 million. A five percent efficiency cut to non-essential spending would generate approximately $340 million. That’s $895 million in available funds against deficits between $691.9 million and $783.1 million.
H.R. 1 didn’t create this crisis.
What Polis Knew
When Polis delivered his address on January 15, 2026, the Joint Budget Committee had already scheduled hearings on “Background on the Budget Shortfall.” The December 2025 forecast warned of tariffs, inflation, and elevated recession risk. Revenue had fallen $464.7 million below the Referendum C cap.
Polis knew FATC and the expanded EITC were eliminated 27 days earlier. He knew energy costs were rising. He knew his executive orders had suspended $742.2 million in appropriations and cut $616.2 million from Medicaid. He knew a hiring freeze prevented agencies from filling positions. He knew Legislative Council Staff projected deficits between $691.9 million and $783.1 million. He knew the General Fund reserve was $691.9 million below statutory requirements.
He celebrated instead.
Polis praised programs that no longer exist. He claimed savings his office had eliminated. He blamed Washington for a crisis his own policies created. He celebrated energy savings while utility rates rose. He described TABOR refunds as eliminated while his office projected their return. He claimed double-digit reserves while his budget was $691.9 million short of legal requirements.
The pattern is clear. Polis expanded Medicaid spending by 19 percent annually while TABOR limited revenue growth to 3 to 4 percent. He celebrated programs funded by temporary federal stimulus without building sustainable state revenue. He allowed agencies to accumulate excess reserves while other departments claimed emergency shortfalls. He permitted obsolete commissions to keep appropriations years after they stopped functioning. He oversaw accounting failures measuring in hundreds of millions of dollars.
When the inevitable reckoning arrived, he blamed Washington. His State of State address painted federal policy as an obstacle. State audits, PUC proceedings, HCPF analyses, legislative forecasts, and his own executive orders point to fiscal mismanagement that predated federal action.
The legislature returns to work facing choices Polis avoided. The fiscal wreckage he leaves behind isn’t the result of federal policy. It’s the result of seven years of programs expanding faster than revenue could sustain them, masked by a final address that celebrated victories that don’t exist and ignored crises his own orders document.
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