Colorado Governor Jared Polis signed an executive order on February 26, 2026, directing state agencies to assess the financial impact of the federal budget reconciliation measure, H.R. 1, passed in July 2025. The order initiates a comprehensive review of how the law will affect state tax revenue, Medicaid funding, and the Supplemental Nutrition Assistance Program (SNAP).
The move by Colorado reflects a broader trend among states grappling with the consequences of the federal legislation. H.R. 1, enacted through the budget reconciliation process, allows for passage with a simple majority vote in Congress. The law revises numerous provisions originally established during the Trump administration in 2017, prompting states to re-evaluate their own fiscal strategies.
A key area of concern for states is the impact on tax revenue. State tax codes often conform to the federal code, meaning changes at the federal level can directly affect state collections. Nearly all states with personal income taxes utilize the federal definition for taxable income, creating a direct link between federal and state tax systems. The Federalism Index notes that states are increasingly focused on gubernatorial executive orders and state supreme court decisions as they navigate these changes.
Medicaid funding is another critical area under scrutiny. H.R. 1’s alterations to Medicaid policies are expected to create both near-term costs and longer-term budget pressures for states. Policymakers are simultaneously contending with sluggish revenue growth, rising spending demands, and diminishing fiscal flexibility, according to a recent report by Rebecca Thiess and Justin Theal.
SNAP, which provides food assistance to millions of low-income individuals and children, is also undergoing changes as a result of the federal law. States are working to understand how these modifications will affect program costs and eligibility requirements. The Pew Charitable Trusts reports that states are “moving fast to adapt” to the new federal-state fiscal dynamic.
The Utah Federalism Commission provided funding for the State and Local Policy Tracker, which is monitoring legislative and judicial actions affecting the balance of power between federal, state, and local governments. The tracker highlights the growing importance of understanding state government trifectas – when a single party controls the governorship and both chambers of the state legislature – as these configurations can significantly influence policy outcomes.
As of January 30, 2026, the State and Local Policy Tracker is providing updates on major legislation and regulations impacting federalism. The 119th Congress currently has bills and resolutions indexed under various policy areas, according to information available from Congress.gov. However, the specific impact of these federal changes on individual state budgets remains under assessment.
Governor Polis’s office has not yet released a timeline for the completion of the state’s fiscal impact assessment. The Colorado legislature is currently in session, and lawmakers are expected to address the implications of H.R. 1 during upcoming debates on the state budget.
