Colorado Redirected $306 Million From Taxpayer Refunds. Care Workers' Wages Stayed Frozen Anyway.

Colorado's Taxpayer's Bill of Rights (TABOR) makes one promise a state constitution rarely makes: when government collects more than a formula says it can keep, it has to give the money back.▸ State revenue subject to TABOR is projected to exceed that formula — the "Referendum C cap" — by $483.0 million in FY 2026-27 and $674.1 million in FY 2027-28, per the Colorado Legislative Council Staff's June 2026 Economic & Revenue Forecast. Under the plain reading of the law, essentially all of that — $1.16 billion — goes back to taxpayers. Instead, a bill the legislature passed on a party-line vote in May 2026 keeps $306.2 million of it in the state budget.

The mechanism is House Bill 26-1419, "Over-Refund of Excess State Revenues." Current law already lets the state trim a future refund if a past one turned out to be too generous — an "overrefund" adjustment.▸ HB 26-1419 applies that adjustment retroactively to FY 2024-25, on the theory that a mid-2025 change to federal tax law (the reconciliation act signed that July) reduced Colorado income-tax revenue in a way the FY 2024-25 books didn't capture in time. The bill directs the state controller to treat part of that year's refund as having been an overrefund, then subtract $153.1 million from each of the next two years' refund obligations to correct for it.

The result: instead of refunding $1.16 billion, the state owes taxpayers $850.9 million and keeps $306.2 million — a reduction the June 2026 forecast records plainly as "the overrefund adjustment designated in HB 26-1419."▸ Whether that designation will survive a legal challenge is genuinely unresolved. The bill passed the Joint Budget Committee 4-3, on a straight party-line vote, after the state's own bill drafter told lawmakers his office was "unaware of the legal basis for the changes," and Republican Sen. Barbara Kirkmeyer argued the FY 2024-25 books had already been closed with no overrefund on them at all, warning the move could jeopardize the state's audit opinion and bond rating — reporting confirmed by Colorado Politics. Democrats, who control the committee, argued the correction was legitimate and necessary. A companion bill, HB 26-1363, did the same kind of work through a separate lever: it temporarily cut the state's required General Fund reserve from 15% of appropriations to 13%, freeing another $287.8 million in FY 2026-27 alone that would otherwise have had to sit untouched, per the same Legislative Council Staff forecast.

Both bills exist because the Joint Budget Committee spent the first four months of 2026 closing a budget gap that reached roughly $1.5 billion, driven mainly by Medicaid and school-finance costs growing faster than TABOR lets General Fund spending grow.▸ Some of that gap was closed by redefining what counts as a refund. The rest was closed by cutting what Medicaid pays the people who deliver the care.

Colorado's own fact sheet lists the sequence: a 1.6% pandemic-era rate increase eliminated and dental rates cut 15.5% in October 2025, Community Connector rates cut 15% in January 2026, and a further 2% across-the-board cut on July 1, 2026 — projected to save about $95 million statewide, per Colorado Sun reporting on the committee's final vote.▸ The same round of cuts doubled the wait for 24/7 adult developmental-disability services to roughly 14 years and capped family caregivers at 56 paid hours a week, the Sun reported — savings measured in dollars, felt as time nobody has.

Underneath those rate cuts is a wage floor that didn't move either.▸ Every home-care aide, personal-care worker, and habilitation specialist paid through Colorado's Medicaid home- and community-based waivers has to be paid at least a Direct Care Workforce Base Wage set by the state. That floor has held at $17.00 an hour through all of 2026 — the department's own page confirms "no increase to the direct care worker base wage for 2026." PHI National's Direct Care Workforce State Index counts 62,010 Coloradans in that job — personal care aides, home health aides, and nursing assistants — whose 2022 median wage of $16.73 an hour was already barely above that floor before two more years of inflation. They serve a caseload that keeps growing regardless: average annual Medicaid enrollment is projected at 1,237,203 people for FY 2025-26, per the department's own budget request to the legislature — up 2.43% from the year before, the single largest driver of the gap TABOR wouldn't let the budget cover.

Dollar and percentage figures are drawn from Colorado's own fiscal documents current as of the June 2026 forecast and are subject to revision as the state controller certifies final FY 2025-26 numbers in September 2026; the legality of HB 26-1419's refund reduction has not been tested in court as of publication.