Colorado lawmakers expected to reconvene in August to make big budget cuts due to Trump's "big, beautiful bill"

A week after President Trump signed his "big, beautiful bill" into law, state economists are unpacking what it means for Colorado.

Overall, the state is anticipating a billion-dollar hit in the first year from the new law, which is why Gov. Jared Polis is considering calling the legislature back into session next month to make cuts.

Based on early estimates, state spending will increase by $100 million to $200 million this year while tax revenue will shrink by $600 million to $800 million this year. New tax deductions for overtime pay and tips account for $200 million of the lost revenue.

The law provides a deduction for the first $25,000 in tips and those earning overtime pay can deduct up to $12,500.

But starting next year, the overtime provision won't apply in Colorado due to a new state law.

"Then to turn around and see that Colorado is adding back a tax on overtime in the state of Colorado is just... It's nauseating to me," said Gabe Evans, a Republican who represents Colorado's 8th Congressional District. He's backing a ballot measure that would block the law from taking effect and prevent the state from continuing to tax tips, too.

Democratic state Sen. Judy Amabile, a member of the Legislature's Joint Budget Committee, says Democrats have no intention of passing a law that would result in tips continuing to be taxed by the state.

"I haven't heard about anybody wanting to do that," she said. "That has never come up in any of the policy decisions."

But she says the tax breaks come with a cost.

"We're going to have to look at K-12, transportation, infrastructure, roads and bridges. All of that will be impacted by these massive budget cuts," she said.

Evans says the new law isn't the problem but rather years of massive spending increases.

"Whenever Democrats say cuts what they usually mean is cut on increases," Evans said.

He says the state budget has grown by $15 billion -- or more than 50% -- in the last seven years.

"That is a direct result of the taxing, the spending, the feeing, the increasing of the state of Colorado trying to reach into people's pockets and take more money out," he said.

Amabile says the Taxpayer Bill of Rights limits how much the state can spend each year, and the legislature is required to have a balanced budget.

"The reductions to our revenue are going to have a significant impact on our budget and we are going to have to make cuts."

Those cuts will be easier to make now than six months into the state's new budget year, which started July 1. Amabile says a special session is likely next month. While lawmakers are not expected to change tax deductions for overtime and tips during the special session, they will likely change some tax deductions for businesses, which could have the biggest impact on the budget.