The 2025 legislative session begins tomorrow. With a $1 billion budget shortfall looming, Colorado lawmakers are already facing tough decisions on how to tackle issues affecting residents and businesses alike. In addition, following the November election, Colorado lawmakers will arrive at the state capitol to a newly elected class of legislators, caucus leadership and new committee assignments.
While the Democrats still hold a strong majority in the House, after losing three seats to Republicans in the November election, they’ll no longer enjoy their supermajority this year. The House will welcome 21 new members to their 65-member chamber. While the upper chamber will welcome eight new senators, including six coming from the House. Senate Democrats will also come to the building under the leadership of newly elected Senate President James Coleman and President Pro Tempore Dafna Michaelson Jenet.
Adding another layer of complexity is Gov. Jared Polis, whose priorities do not always align with those of legislative leaders. Known for his libertarian-leaning market approaches and facilitating state partnerships with the private sector, the governor’s independent streak could play a significant role in shaping—or limiting—the scope of legislative action.
From workforce development and health care to housing and labor reforms, here’s a breakdown of the most prominent issues likely to dominate the 2025 legislative session.
Budget Shortfall
The state’s $1 billion budget shortfall will heavily influence policy decisions across all sectors. This deficit stems from a combination of reduced tax revenue, increased expenditures and broader economic pressures.
A slowing economy and low inflation rates have led to decreased tax collections in critical areas, including corporate income and severance taxes from major industries. At the same time, costs for vital state programs such as Medicaid, K-12 education and public infrastructure continue to rise, further straining the budget.
The situation has worsened as one-time federal pandemic relief funds have run out. In previous years, these funds enabled Colorado to invest in workforce development, education and public health initiatives. With this support no longer available, the state must now absorb these costs into its general fund, creating additional financial strain.
To address the deficit, Gov. Polis has proposed several measures, including freezing Medicaid provider reimbursement rates, revising how K-12 students are counted for funding and adjusting the implementation of a new school finance formula. He has also suggested privatizing Pinnacol, Colorado's state-chartered workers’ compensation insurer, allowing it to expand its operations beyond the state in exchange for $100 million annually to help offset general fund allocations to the Public Employees Retirement Association (PERA). While these initiatives aim to contain costs without sharply cutting essential services, they have raised concerns among stakeholders regarding their long-term implications for education, health care and workforce development.
Sen. Barbara Kirkmeyer (R), a member of the Joint Budget Committee, expressed skepticism about the governor's proposals, particularly the adjustments to education funding and the potential for increased college tuition rates. Similarly, fellow Joint Budget Committee member Rep. Emily Sirota (D) has expressed concern about the ramifications of Pinnacol’s privatization.
The impact of the budget shortfall will resonate across nearly every legislative priority, forcing lawmakers to make challenging tradeoffs in order to balance the budget while addressing Colorado’s most urgent needs. The challenge will be to identify innovative solutions that sustain progress in key areas while safeguarding the state’s fiscal health. Joint Budget Committee Chair Sen. Jeff Bridges (D) highlighted these concerns during discussions around the governor’s proposals, acknowledging the need for balanced approaches that align with the legislature’s priorities. Multiple members of the Joint Budget Committee have emphasized the necessity of finding legislative solutions that can address state issues without incurring additional costs.
Labor and Employment
The labor movement is gearing up for significant legislative initiatives in 2025, with efforts underway to reform Colorado’s Labor Peace Act. One key proposal aims to eliminate the requirement for a second election to establish union security agreements. This initiative has garnered support from a group of House and Senate Democrats, including Reps. Jennifer Bacon and Javier Mabrey as well as Senate Majority Leader Robert Rodriguez. They argue that this bill is designed to support the middle class and safeguard workers’ rights across the state.
The Colorado Fiscal Institute has also expressed its backing for the bill, emphasizing that easing the process for forming unions would enable workers to negotiate higher salaries, ultimately benefiting the state’s economy. However, the proposal faces significant opposition from Gov. Polis and various business groups. A spokesperson from the governor’s office stated that abolishing the second-election requirement could jeopardize “an avenue to strengthen unions through union security agreements.” Concerns have also been raised by the Denver Metro Chamber of Commerce, the Colorado Chamber of Commerce and several other business organizations, which argue that the bill could deter businesses from moving to or expanding in Colorado due to the potential for increased worker conflicts.
Additional labor initiatives on the horizon include proposals targeting wage theft, captive audience laws and predictive scheduling requirements for employers. While these policies aim to protect workers’ rights, they may face resistance from industries concerned about their operational implications. For example, during the 2023 legislative session, HB 1118, known as “The Fair Workweek Employment Standards Act,” faced significant pushback. This bill sought to mandate an “anticipated work plan” and establish a minimum weekly pay of 15% of the average weekly hours outlined in that plan. Business and employer organizations opposed the bill then and will likely oppose it again.
Environmental Policy
As federal environmental regulations may be rolled back under the Trump administration and a Republican-led Congress, Colorado’s legislature is likely to become even more proactive. For instance, the Colorado Department of Public Health and Environment has already proposed eight bills to the Joint Budget Committee, all of which are aimed at state air and water quality regulations. Initiatives regarding water conservation are also expected. Extended producer responsibility (EPR) is set to be a significant topic again this year, particularly with a proposal from Sen. Lisa Cutter (D) on lithium battery disposal.
Furthermore, efforts to reach the state’s goal of 100% renewable energy by 2040 may gain renewed momentum. These initiatives could include expanding renewable energy opportunities through expedited siting permits and tightening regulations on fossil fuels and emissions. The Colorado legislature is also anticipated to introduce proposals related to carbon and energy storage systems, aimed at strengthening the state’s electric grid. Vehicle emissions and choice in modes of transportation are also likely to be topics of debate this session. In particular, stakeholders from the environmental and energy sectors will be closely monitoring whether new legislation builds on last year’s agreements or introduces new mandates.
Health Care
Health care is a crucial area that will be significantly impacted by budget constraints affecting policy decisions. The Colorado Department of Health Care Policy and Financing (CHCPF) has come under scrutiny following the federal expiration of expanded Medicaid availability during the pandemic. States are now required to conduct benefit reviews for all Medicaid recipients, leaving tens of thousands of Coloradans without access to Medicaid benefits during the waiting period. Additionally, the CHCPFunderestimated the budget required for Medicaid and Medicare provider payouts, resulting in a debt of $150 million. Medicaid provider reimbursement rates are facing increased scrutiny, and the legislature will need to balance financial limitations with the necessity of supporting health care access.
There are also proposals to address staffing shortages, and we could see legislation again that would propose mandated staffing ratios in hospitals and nursing homes. While the proponents of these measures say the purpose is to improve patient care, opposition is likely from health care providers who have raised concerns about feasibility and costs in the past. The Colorado legislature will also need to respond to any federal actions that change or reduce Medicaid spending.
Housing and Land Use
Housing affordability and property tax relief remain pressing concerns across Colorado. Thanks to a special session, Gov. Polis signed a bipartisan bill into law to provide property tax relief for homeowners and commercial property owners. It is possible that additional bills aimed at reducing property taxes could be introduced during this session to address any implementation issues.
Last session, legislation was defeated concerning construction defect reform and legislation is expected to return this session. This session may also see legislation that attempts to address Colorado’s declining construction workforce. Workforce development legislation has been a consistent focus of the legislature over the last several years and a stronger construction workforce is critical to increasing the supply and, ultimately, the affordability of housing across the state.
Finance and Technology
On the technology front, the legislature is expected to undertake a “cleanup” of last year’s comprehensive artificial intelligence (AI) bill. The AI task force established this interim has been tasked with examining the legislation, engaging with stakeholders and coming up with recommendations. The task force is set to deliver its findings and recommendations to the state legislature in early February. Following this report, it is very likely that legislation will be introduced that alters the bill we saw in 2024.
In addition to AI regulation, the legislature is also likely to revisit a proposal regarding youth social media usage. Last session, SB 24-158 sought to require social media platforms to clarify usage guidelines, incorporate age verification measures and implement safety protocols for minors using these platforms. Although the bill ultimately failed, this issue remains a high priority for many in the legislature.
Summing It Up
The 2025 legislature promises to be a compelling session, with critical issues like health care, workforce development, housing and the impact of artificial intelligence (AI) taking center stage. As legislators grapple with the rising costs of health care and the need for expanded access, they will also confront the pressing challenges of workforce shortages and the demand for skilled labor. The integration of AI technologies will raise new questions around ethics, job displacement and regulatory needs, prompting lawmakers to explore how to harness its potential while protecting workers and consumers. Additionally, housing affordability will remain a hot topic, as communities seek solutions to combat the ongoing crisis. With these dynamics in play, the 2025 session will undoubtedly be a 120-day whirlwind, requiring lawmakers to navigate shifting alliances and competing priorities to effectively address these pressing issues facing Colorado.
This document is intended to provide you with general information regarding the 2025 Colorado legislative . The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.