Governor Polis calls Colorado Legislature into Special Session on August 21

Posted by Katie March on August 6, 2025

Governor Polis announced that he would call the legislature back for a special session beginning at 10:00 a.m. on August 21 to address the budget shortfall that will be created in the state due to the Federal tax bill and to address Colorado’s artificial intelligence bill.

The budget shortfall caused by the “Big, Beautiful Bill” passed in Congress earlier this month is estimated to be about $1 billion dollars, out of the state’s overall $43.9 billion budget.

Closing this budget gap will be difficult, especially after lawmakers already made extensive cuts to close a previous $1.2 billion shortfall in the budget during their regular session budget planning. The shortfall is due largely to the rising costs of healthcare and education.

The main provisions from the federal law causing this shortfall are due to changes in the tax code that reduce the burden on individuals and corporations. The decrease in corporate income tax revenue could be as much as $950 million. The exemption from income taxes for the first $25,000 of overtime earned by families (or $12,500 for individual tax filers) is expected to cost up to $290 million.

It is anticipated that the legislature will initially look to close this budget shortfall by closing tax loopholes for businesses, implementing a state hiring freeze, and some executive actions. But they will likely still need to cut other state budgets as well.

While the budget discussions will be painful, the conversation around artificial intelligence might be even more challenging. The AI conversation has been a roller coaster over the last two sessions with many ups, downs, and a few loop-de-loops. During the special session, the tech industry, businesses, and many legislators would like to see action taken to modify or delay the implementation of a 2024 law that was passed that aims to prevent discrimination by artificial intelligence tools, but could have negative impacts on businesses that employ AI tools. Last session, negotiations broke down when Majority Leader Robert Rodriguez and his allies ended the negotiations on the bill that he was sponsoring to modify his 2024 bill. Another bill to delay implementation was dramatically filibustered. If implementation is not delayed. the 2024 bill goes into effect on February 1, 2026.

Special sessions in Colorado usually only last for the 3-day minimum, because negotiations are completed before the session gavels in. However, the session can go longer – there is no time limit (this lobbyist has never seen one go past 4 days). Many stakeholders are concerned that it will be difficult to come to a consensus on a bill that is not negotiated in advance in a short legislative session. A final interesting point, in his call for the special session, Governor Polis notes that addressing the “fiscal and implementation impacts” of artificial intelligence is one of the ways that Colorado could consider shoring up the budget shortfall created by H.R.1, indicating the Governor is planning to push lawmakers to make a change to this law for budgetary purposes. Stakeholders will be hard at work over the next two weeks to come to a consensus on artificial intelligence and budgetary issues.

You can see Governor Polis’ official call for the special session here.

Learn more about the special session by reading some great reporting from the Colorado Sun.

Posted in Advocacy on the Move, Colorado Advocacy.