Colorado Lawmakers Sound Alarm on Budget Crisis and AI Regulation Vacuum

By Marianne Goodland | Denver Gazette

Will there be a special session this month?

Multiple sources have told Colorado Politics that on Wednesday the governor will call the General Assembly back to Denver on Aug. 21.

Members of the Joint Budget Committee showed signs Tuesday that they’re ready to go — and need only the word from the governor to get started.

Policymakers’ main challenge will be cuts totaling $955 million in general funds, the result, according to Democrats, of federal tax policy changes that came out the budget adopted by Congress and signed by President Donald Trump on July 4 but which Republicans argued is a problem of the state’s own making.

Secondarily, the call could include a request to fix Senate Bill 24-205, the artificial intelligence regulation that is set to go into effect Feb. 1, 2026.

SB 205 establishes rules around the use of artificial intelligence, primarily in employment, health care, education, and government practices, where, backers said, the risk of bias or discrimination exists. Businesses have argued that the new law is problematic, potentially penalizing mom-and-pop end users of the technology, instead of the big companies that created the AI software.

In his May 17, 2024, signing statement, Gov. Jared Polis asked lawmakers to keep working on it before its 2026 implementation date.

“I am concerned about the impact this law may have on an industry fueling critical technological advancements,” Polis said. State-level government regulation, he added, can “tamper with innovation and deter competition.”

A month later, Polis, Attorney General Phil Weiser and Senate Majority Leader Robert Rodriguez, D-Denver, penned a joint letter to “innovators, consumers and all those interested in the AI space,” in which they pledged to provide clarity around the law and minimize the “unintended consequences” associated with the bill’s implementation. That includes convening a legislatively created task force to propose recommendations on changes requested after the bill becomes law, they said. 

The leaders said “home-grown businesses” had highlighted a risk tied to an “overly broad definition of AI,” along with disclosure requirements that could impose high costs and result in barriers to growth and product development, job losses, and limitations on raising capital.

The leaders wanted a fix in five areas. Rodriguez, meanwhile, pushed a bill in the final week of the 2025 session but then pulled it. An attempt to delay the implementation date of the AI bill to give the stakeholders more time also failed.

At least two bills are being contemplated on the AI issue for the special session: a version authored by Rodriguez and another from the tech side.

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