Will there be a special session this month?

Multiple sources have told Colorado Politics that on Wednesday the governor will call the General Assembly back to Denver on Aug. 21.

Members of the Joint Budget Committee showed signs Tuesday that they’re ready to go — and need only the word from the governor to get started.

Policymakers’ main challenge will be cuts totaling $955 million in general funds, the result, according to Democrats, of federal tax policy changes that came out the budget adopted by Congress and signed by President Donald Trump on July 4 but which Republicans argued is a problem of the state’s own making.

Secondarily, the call could include a request to fix Senate Bill 24-205, the artificial intelligence regulation that is set to go into effect Feb. 1, 2026.

SB 205 establishes rules around the use of artificial intelligence, primarily in employment, health care, education, and government practices, where, backers said, the risk of bias or discrimination exists. Businesses have argued that the new law is problematic, potentially penalizing mom-and-pop end users of the technology, instead of the big companies that created the AI software. 

In his May 17, 2024, signing statement, Gov. Jared Polis asked lawmakers to keep working on it before its 2026 implementation date.

“I am concerned about the impact this law may have on an industry fueling critical technological advancements,” Polis said. State-level government regulation, he added, can “tamper with innovation and deter competition.”

A month later, Polis, Attorney General Phil Weiser and Senate Majority Leader Robert Rodriguez, D-Denver, penned a joint letter to “innovators, consumers and all those interested in the AI space,” in which they pledged to provide clarity around the law and minimize the “unintended consequences” associated with the bill’s implementation. That includes convening a legislatively created task force to propose recommendations on changes requested after the bill becomes law, they said. 

The leaders said “home-grown businesses” had highlighted a risk tied to an “overly broad definition of AI,” along with disclosure requirements that could impose high costs and result in barriers to growth and product development, job losses, and limitations on raising capital.

The leaders wanted a fix in five areas. Rodriguez, meanwhile, pushed a bill in the final week of the 2025 session but then pulled it. An attempt to delay the implementation date of the AI bill to give the stakeholders more time also failed.

At least two bills are being contemplated on the AI issue for the special session: a version authored by Rodriguez and another from the tech side.

In a July 25 letter to the governor, a coalition of schools, colleges, tech, and medical organizations also pleaded to fix SB 205.

“This law creates unexpected and costly problems for organizations simply using everyday AI-enabled software, from K-12 schools and universities to hospitals, banks, and local governments,” the group said, adding these institutions face “heavy and costly burdens for compliance and increased liability concerns for the use of common AI-powered platforms in basic operational functions.”

The group added: “These impacts represent a substantial and unnecessary strain on core public services and institutions that were never the intended targets of this legislation. Additionally, this law will impose significant implementation and compliance costs on a state budget that is already under massive cost-cutting pressure.”

Meanwhile, a coalition of labor, consumers and civil rights groups asked the governor on Tuesday to leave the law well enough alone.

“SB 24-205 was passed well over a year ago. Special interest groups that have persistently mischaracterized the law and shown no willingness to compromise should not be rewarded with a special session that caves to their demands,” they wrote.

JBC finally gets the numbers

The Joint Budget Committee (JBC) met on Tuesday to get an updated revenue forecast from state economists and the Office of State Budgeting and Planning — a briefing that economists gave legislative leadership last week.

That the legislative leaders were already engaged in discussing the shortfall had rankled JBC members, who met for the first time since the June revenue forecast to look over the numbers.

Rep. Rick Taggart, R-Grand Junction, fussed about the lack of engagement with the JBC from the governor’s office.

He noted that OSPB Director Mark Ferrandino, who was in the meeting, has said several times that every day policymakers wait, the cuts would get worse.

“We’re still waiting” on a definitive answer on whether there will be a special session, Taggart told Ferrandino.

“Leadership is critical at a time like this,” he added.

Ferrandino said analyts have only understood the size and scope of H.R. 1, the congressional budget, on the state’s finances in the last two weeks and they are still trying to get information.

The governor is considering all options, Ferrandino said.

JBC Chair Sen. Jeff Bridges, D-Greenwood Village, told Ferrandino that any cuts made or plans to address the shortfall by the administration should be done in conversation with the JBC and the legislature.

“I do not want this to be ‘the gov sent out an order and departments cut 1%’ and we’re informed afterwards,” Bridges said.

Bridges told Colorado Politics he believes the shortfall would be covered by a combination of tapping the state’s general fund reserve and spending cuts. He noted the JBC staff put together a list of cuts that the JBC relied on to cover the $1.2 billion shortfall in the 2025-26 budget.

The JBC didn’t tap all of those cuts, he explained.

Everything is on the table, Bridges emphasized. That includes looking at programs they funded in the 2025-26 budget.

One of the issues the JBC looked at on Tuesday is the governor’s authority and just how much he can do without the legislature.

The answer, as it turns out, is quite a bit.

State statutes — and the JBC decided it might want to have a conversation about changing them — allow the governor to act without legislative approval.

There are three statutes available, but only one applies to the situation the administration and legislature have at hand.

The first allows the governor to develop a plan if the shortfall takes up half of the statutory reserve or the reserve drops below $1 billion. The governor would be required to bring that plan to the legislature “promptly.”

But the trigger for using that statute requires four consecutive revenue forecasts showing those shortfalls, and that wouldn’t happen, at the earliest, until the September forecast, according to attorneys with the Office of Legislative Legal Services.

A second statute would require the governor and legislature to approve a fiscal emergency resolution. That’s never been done, although it was discussed in the wake of the Great Recession of 2008. That would also trigger the ability to impose layoffs.

The statute at play, C.R.S. 24-2-102, has been used twice, in 2002 and 2009.

The governor can determine that the state has insufficient revenue to carry on the functions of state government, and by executive order can suspend or discontinue functions or services of any department, board, bureau or agency.

That declaration would go into effect on the first day of the following calendar month and can be extended for up to three months.

The statute does not spell out how the governor would make that determination.

The JBC also got its first look at some of the supplemental requests that will come its way come January — and it didn’t go over well with Sen. Barbara Kirkmeyer, R-Brighton.

The Department of Corrections is anticipating asking for $15 million for additional caseload, third-party medical personnel services, and food service inflation.

State agencies are also asking for up to $5 million to implement SB 24-205, the new artificial intelligence regulation. The bill’s fiscal note said there could be increased costs for the Department of Law and the Judicial Department to deal with complaints.

The Office of Information Technology and other unnamed state agencies could require funding to comply with the bill’s requirements for documentation, testing, and appeals, noting “any necessary resources will be requested in future years through the annual budget process.”

Another $60 million could be sought by the Department of Health Care Policy and Financing, which operates Medicaid, to cover over expenditures that must be paid by law.

Kirkmeyer, in response, asked why the governor has not implemented a hiring freeze.

“We knew in March” that the state budget was on an unsustainable path, she said, noting policymakers were looking at paying for homestead exemptions out of the general fund instead of relying on the TABOR surplus.

“We knew in June we were $600 million to $700 million short,” yet the administration is now asking for more spending, rather than cuts, she said.

Kirkmeyer told Ferrandino she wants to know what the governor’s plan is and what he intends to cut.

“I’m deeply offended,” she told Ferrandino, referring to conversations she argued have circumvented the JBC process, including by the legislative leaders.