In a high-stakes special session Tuesday, Colorado lawmakers approved two major tax credit bills to address a $783 million budget shortfall and voted to delay implementation of the state’s landmark artificial intelligence regulation. The day’s proceedings were marked by fiscal urgency, partisan maneuvering, and growing tensions over ethical conduct in the Capitol.

Budget Bills Pass, Narrowing Deficit

The legislature passed House Bill 25B-1004, authorizing the sale of up to $125 million in corporate and insurance premium tax credits. The move allows businesses to pay taxes early at a discount, generating an estimated $100 million in immediate revenue for the state’s general fund.

A companion measure, House Bill 25B-1006, directs $100 million to the Health Insurance Affordability Enterprise fund, designed to stabilize premiums for residents in high-cost regions, especially on the Western Slope. Both bills now await Governor Jared Polis’s signature.

“These bills reflect a balanced approach to fiscal responsibility,” said House Speaker Julie McCluskie (D-Dillon). “We’re leveraging smart tools to protect essential services.”

AI Law Delayed After Industry Walkout

Lawmakers also voted to postpone implementation of Senate Bill 24-205, Colorado’s sweeping AI accountability law, from February 2026 to June 30, 2026. The delay follows a breakdown in negotiations between tech industry representatives and consumer advocates.

Senate Majority Leader Robert Rodriguez (D-Denver) expressed disappointment: “We had a compromise ready, but the industry backed out. This extension gives us time to refine the law, but it’s a setback.”

The legislation, which mandates transparency and bias mitigation in high-risk AI systems, has drawn national attention. Stakeholders—including educators, developers, and civil rights groups—are expected to reconvene this fall to revise key provisions.

Procedural Tensions and Ethical Reckoning

The session’s final hours saw heightened political friction. House Democrats invoked a rare procedural rule to end Republican filibusters, citing excessive delays and mounting costs.

Meanwhile, a resolution condemning former Representative Ryan Armagost (R-Berthoud) for sharing a private photo of a colleague in a GOP group chat is expected to pass. The incident led to widespread harassment and renewed calls for ethical reform.

“This is about accountability and the culture we foster in public institutions,” said Rep. Jennifer Bacon (D-Denver), co-sponsor of the resolution.

What’s Next

Governor Polis is expected to unveil a spending cut proposal later this week to address the remaining third of the deficit. Analysts anticipate reductions in administrative overhead and deferred capital projects, with education and healthcare funding likely to be preserved.

The legislature will reconvene in regular session next month, with AI reform, wildfire mitigation, and housing affordability topping the agenda.

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