The Colorado FY2026-27 state budget proposal released by the Joint Budget Committee would cut $130 million from Proposition 123, approximately 40% of the program’s total funding. Colorado is facing a $1.5 billion budget deficit for the upcoming fiscal year, with social programs facing most of the cuts required to balance the budget.
Proposition 123 was approved by voters in 2022 and has become an essential program to fund affordable housing construction in Colorado. These cuts would most sharply affect low-income rental apartment funding, slashing that portion of the program by 75%. Legislators have proposed legislation that would direct the Office of Economic Development and International Trade, which manages most of Proposition 123’s spending, to use remaining funds to target housing for those making 50% of the area median income. Budget deliberations are still ongoing in the state house and senate, and session is scheduled to adjourn sine die on May 13, 2026.
Housing advocates have also asked the state for a commitment to restore Proposition 123 funding when the budget crisis resolves, though the state made a similar promise in 2009 for K-12 education during the Great Recession, and funding was only restored to 2008 levels in 2024.
