# Two States, Two Budgets, One Very Different Bill: Colorado and Idaho in 2026 Colorado PERA is 75.31% funded with a $24.19 billion shortfall. Idaho PERSI is 90.89% while assuming lower returns, so the gap is wider than it looks. Author: J.A. Watte Published: August 12, 2026 Source: https://jwatte.com/blog/colorado-idaho-state-budgets-taxpayer/ --- Both states just finished a budget. Colorado's fiscal year 2026-27 began on 1 July 2026, appropriated through House Bill 26-1410, the Long Bill, signed on 8 May. Idaho's fiscal year 2027 began the same day, appropriated during the 2026 legislative session and summarised in the Legislative Services Office fiscal report. Two western states, same calendar, same set of pressures. The documents tell very different stories. I went looking for the obvious one, which is that Colorado has a pension problem and Idaho does not. That turns out to be true, and it turns out to be the least interesting thing in either document. What is actually going on is stranger, and in one important respect Colorado comes out ahead. ## The number that decides everything else Medicaid takes **34.5%** of Colorado's general fund. In Idaho it takes **18.6%**. Colorado's Department of Health Care Policy and Financing was appropriated $6,022,160,541 of general fund for 2026-27, against total general fund operating appropriations of $17,461,279,123. Idaho's Division of Medicaid got $1,047,899,300 of a $5,621,837,100 general fund. Growth was similar. Colorado's Medicaid line rose 8.4% year over year. Idaho's rose 5.4%. Neither state is holding it flat, and anyone telling you Idaho has Medicaid under control is not reading the appropriation. But an 8.4% rise on a third of the budget and a 5.4% rise on a fifth are not the same event. In the budget package the Colorado Joint Budget Committee recommended, Medicaid's general fund increase came to $212,977,876 while the entire general fund increase came to $212,094,909. Medicaid's growth was larger than all the growth there was. Thirteen departments were cut to make the arithmetic work. That is the whole squeeze in one line. Not that Medicaid grew fast, but that it grew fast while already claiming a third of the money. ### Both states cut. One cut harder. I nearly published the version where Idaho acts and Colorado dithers. It is not true. Colorado adopted a **2% across the board provider rate reduction**, worth $222.0 million, plus $48,759,675 of eligibility and benefit reductions. Idaho's FY2027 maintenance bill cut the Department of Health and Welfare's ongoing general fund appropriation by **4.5%**, and the Division of Medicaid imposed a **4% across the board provider rate reduction** to get there. Idaho also passed a Budget Rescissions Act taking $131.3 million out of the general fund mid year, on top of a 3% executive holdback. Both states reached for the same lever. Idaho pulled it twice as hard, and did it from a position where the line being cut was half as large. There is a wrinkle worth naming. Idaho's own department describes the pressure honestly: on an all funds basis, health and human services grew 8.1% and public safety 3.2%, so Medicaid plus corrections plus state police went from **39.2% to 45.4% of the all funds budget in a single year**. Part of that is the denominator falling roughly 6% as one time federal money expired. But only part. ## The pension gap, and why the usual framing understates it Colorado PERA's five division trust funds held a **$24.19 billion** net pension liability at 31 December 2025, with plan assets covering **75.31%** of the total pension liability. Idaho PERSI's Base Plan held **$2.42 billion** at 30 June 2025, covering **90.89%**. Two things about that comparison get reversed constantly. **First, Idaho reaches the better number using a harsher assumption.** PERSI discounts its liabilities at **6.55%**. PERA uses **7.25%**. A lower assumed return makes the same promise cost more today and makes the plan look worse. Put both systems on one rate, using their own published sensitivity tables, and the gap widens rather than closes. At Idaho's 6.55%, Colorado would be roughly 70% funded. At Colorado's 7.25%, Idaho would be roughly 98%. **Second, the dates cut the same way.** PERA's figure is six months newer and includes a half year of 2025 investment gains that Idaho's does not. PERA returned 14.1% in calendar 2025 and still sits at 75.31%. So the honest version is that the gap is real and slightly larger than it looks, not smaller. Two counterweights belong here anyway, because a comparison you cannot argue against is usually one you have not checked. Idaho's liability assumes only its **1.00% guaranteed** retiree increase. Its actuary puts a 2.00% assumption at roughly $2.6 billion more liability. Idaho is standing on the favourable side of exactly the assumption question that decides how Colorado's fire and police plan reads. And on **mortality**, Colorado is the more conservative of the two: PERA adjusts most of its base tables downward while PERSI loads its rates upward. "Idaho assumes less across the board" would be false. ### Where Colorado's hole actually is It is not in the cities. PERA's **Local Government Division is 96.32% funded**, with a shortfall worth about three months of payroll. Judicial is at 99.37% and Denver Public Schools at 98.61%. The $24 billion sits in two places: the **State Division at 72.61%** and the **School Division at 71.71%**. Against one year of covered payroll, the School Division's shortfall is 222.18%. That is the problem. Colorado municipalities inside PERA are close to fully funded, and any story that puts them at the centre is wrong on PERA's own numbers. One more caution. PERA's own actuary labels the combined 75.31% as being for informational purposes only, because "the assets of each trust fund are for the sole purpose of its members and cannot be used by another fund." There is no single legal pool that is 75.31% funded. Idaho's 90.89% is likewise the Base Plan alone. Add the Firefighters' Retirement Fund, which holds a net pension **asset** of $291.9 million, and the Judges' plan, and PERSI system wide is 92.04%. ## The difference nobody puts on a chart **Idaho public employees are covered by Social Security. Most Colorado PERA members are not.** Idaho accepted Social Security coverage by statute for state, county and city employees under Idaho Code 59-1101, and extended it to police and firefighter positions in 2013. A PERSI pension is a supplement. PERA, in its own words, is a substitute: "Most PERA members do not contribute to Social Security while they are working for PERA employers." This changes two things at once. For the worker, an Idaho public employee holds two independent retirement claims, one of them federal and inflation indexed. A Colorado teacher frequently holds one, on a plan that is 71.71% funded, with a retiree increase capped at 1.00% a year. For the taxpayer, it wrecks the comparison everyone reaches for first. A Colorado state agency pays **21.65%** of payroll to PERA. An Idaho agency pays **11.96%** to PERSI. That looks like 1.81 times. It is not, because Colorado pays no 6.2% employer Social Security tax and Idaho pays it on top. Counted properly, Idaho spends **18.16%** of payroll on retirement income against Colorado's **21.65%**, about **1.19 times**. The 6.2% never appears in either state's pension line, which is exactly why the side by side rate table misleads. What is genuinely unique to Colorado is the debt. Of that 21.65%, ten full points are the **Amortization Equalization Disbursement** and its supplement, which are payments against the unfunded liability rather than payments for benefits. Idaho has no equivalent line because Idaho has no equivalent debt. A further half point of Colorado's rate is retiree health care rather than pension. So the fair summary is not that Colorado pays nearly twice as much for a pension. It is that Colorado pays modestly more in total, and roughly half the difference is servicing a debt rather than buying a benefit. ### How fast each state is paying it off This is where the two systems stop resembling each other. Idaho's projected amortisation period is **8.2 years**, down from 10.8, against a statutory maximum of 25. No contribution rate change took effect on 1 July 2026, and a scheduled 2.50% increase has been pushed back to FY2028 and FY2029. The board has room to delay because the fund is ahead. Colorado's Senate Bill 18-200 set a target of full funding in 30 years and built an **automatic adjustment provision** to keep it on track. When the projection drifts outside a corridor of 98% to 119%, contributions rise and the retiree increase falls automatically. It has triggered twice, in 2018 and 2020. Each time member contributions rose half a point and the annual increase cap came down. It now sits at **1.00% a year**. The 31 December 2025 assessment came in at 103.73%, inside the corridor, so nothing fired this year. The statutory **direct distribution** of $225 million a year from the general fund to PERA was **suspended in full in 2020** under House Bill 20-1379, then repaid through a $380 million warrant under House Bill 22-1029 and a further $14.6 million under Senate Bill 23-056. A separate $500 million sits with PERA under Senate Bill 25-310. PERA's assumed return has been cut repeatedly, from 8.75% in 2002 to 7.25% now. Every cut is honest and every cut makes the same promise cost more. ## Then the two states tax you in opposite directions Colorado's Taxpayer's Bill of Rights caps state revenue and refunds the overage. For FY2026-27, revenue subject to TABOR is forecast at $20,987.5 million against a Referendum C cap of $20,504.5 million, leaving $483.0 million above the cap and a refund obligation of **$329.9 million**. The FY2025-26 obligation was zero. FY2024-25 actually refunded $306.1 million. Idaho spent almost the same money on the opposite thing. In tax year 2025 it delivered **$328.0 million** of property tax relief, made up of $215.2 million through the School District Facilities Fund created by House Bill 292 in 2023, and a $112.8 million homeowner credit. The facilities fund has gone from $97.7 million in 2023 to $215.2 million in 2025. Statewide school property tax actually **fell**, from $439,394,238 to $404,419,064. Colorado caps its own revenue and hands the surplus back, leaving local property tax alone. Idaho takes state income and sales tax money and uses it to pay down local school property tax. Idaho's version works on its own terms, and it has a catch that is easy to miss. It is a transfer, not a saving. A local, visible, voted on cost has been moved onto the state general fund, where it now competes for room with Medicaid and corrections. That is the same general fund Idaho held essentially flat this year, cutting provider rates and holding state salaries at no increase at all for FY2027, funding only the rise in health premiums. Idaho's statewide position cap fell 131.89 positions to 21,149.93. Idaho does have the cushion to absorb it. Its major reserves are projected at $1,231.4 million for FY2027, about 21.8% of estimated general fund revenue. ## So which one is performing better On pensions, Idaho, and not by a small margin. Better funded on a harsher assumption, paying its shortfall down in a third of the statutory window, with a firefighters' fund in surplus and a board that can afford to defer a scheduled increase. On budget discipline this year, Idaho again. It held the general fund flat, rescinded mid year, cut provider rates twice as hard as Colorado, and took no salary increase. On Medicaid, neither. Both are growing it faster than their general funds. Colorado's problem is worse because the line is already twice as large a share. On what the taxpayer gets for the money, it is genuinely closer than the pension numbers suggest, because a third of Colorado's apparent premium is Social Security accounting and much of the rest is debt service on a bill run up years ago. And on the thing that will matter in twenty years, Colorado has a structural exposure Idaho does not. Its public workers largely stand on one pillar instead of two. A 71.71% funded school pension with a 1.00% annual increase cap is not only a taxpayer liability. It is a retirement plan a real person has to live inside. The cities in both states turned out to be a separate and more surprising story, and I have written that up separately. ## The charts I built three of these while working through the documents, and they carry the measurement dates and bases on every figure, which matters more here than usual. **[One plan, or eleven](/infographics/co-id-pensions/)**: every pension plan behind a taxpayer in both states on a single axis, from 56.63% funded to 100%, plus the contribution rates and what the discount rate assumption actually does. **[One line item ate the growth](/infographics/co-id-budget-squeeze/)**: where the money went at state and city level, including the Medicaid share and the health insurance lines. **[The city is a small part of the bill](/infographics/co-id-local-taxes/)**: the two revenue models, the overlapping property tax stacks, and TABOR against Idaho's buy-down. ## Fact-check notes and sources **Colorado general fund and Medicaid**: House Bill 26-1410, the 2026-27 Long Bill, Final Act, signed 8 May 2026, session law chapter 436. Joint Budget Committee, *Budget Package and Long Bill Narrative, Fiscal Year 2026-27*, and *Appropriations Report FY 2025-26*. Note that the narrative states on its own cover that it reflects the bill as introduced and does not reflect final action; the enacted figures come from the Final Act. **Idaho general fund and Medicaid**: Legislative Services Office, Budget and Policy Analysis, *2026 Legislative Fiscal Report for Fiscal Year 2027*, statewide reports and the Health and Human Services sections. A trap worth knowing: the report labels FY2025 and FY2026 columns "Total Appr" and the FY2027 column "Approp", so comparing them directly mixes a total appropriation with an original one. The 5.4% here is original to original. **Colorado PERA**: *2025 GASB Statements Nos. 67 and 68 for Division Trust Funds Valuation*, measurement date 31 December 2025, Exhibit A and the Schedule of Changes in Net Pension Liability; and PERA's *Actuarial Valuation and Review as of December 31, 2025*. **Idaho PERSI**: Milliman, *GASB 67 and 68 Disclosure for Fiscal Year Ending June 30, 2025*, Net Pension Liability table; and the PERSI FY2025 Annual Comprehensive Financial Report, actuarial section, Exhibit 4. The transmittal letter in that report states the unfunded liability as "$3,924.2 billion", which is a unit error contradicted by Exhibit 4 in the same document. Cite Exhibit 4. **Social Security coverage**: Idaho Code 59-1101, with police and firefighter positions added in 2013. Colorado PERA's own member materials for the Colorado side. Avoid the commonly quoted 98% and 30% figures from GAO-10-938: that table measures *earnings*, not employees, and is 2007 vintage. **Contribution rates**: PERA employer rates effective 1 January 2026, by division, including the Amortization Equalization Disbursement and its supplement. PERSI employer rates effective 1 April 2025. The 6.2% employer Social Security rate is the standard OASDI employer share. **TABOR**: Colorado Legislative Council Staff, June 2026 revenue forecast, TABOR tables. **Idaho property tax**: Idaho State Tax Commission annual property tax reports; House Bill 292 of 2023 creating the School District Facilities Fund. Every figure in this article was read from the primary document and reconciled against that document's own printed totals before publication. Twelve of the claims here were then put through an adversarial check whose job was to refute them; all twelve survived, and several are stated more narrowly than I first wrote them because of it. ## Related reading **[The 2026 entitlement infographics](/blog/entitlement-infographics-2026/)**: the federal version of this problem, and where the Social Security assumptions behind it come from. **[The non-wage paycheck](/blog/non-wage-paycheck-employer-costs/)**: what employers actually spend on benefits per hour worked, public and private, and why the public sector figure is mostly debt service. **[The PBGC pension backstop](/blog/pbgc-pension-backstop/)**: what happens when a private plan fails, and why no equivalent exists for a state plan. **[Public money programs index](/blog/public-money-programs-index/)**: the wider set of programmes taxpayers underwrite. *This post is informational, not legal, financial or investment advice. Figures are appropriations and actuarial valuations as published, and both change. Mentions of state agencies and retirement systems are nominative fair use. No affiliation is implied.* --- Canonical HTML: https://jwatte.com/blog/colorado-idaho-state-budgets-taxpayer/ RSS: https://jwatte.com/feed.xml JSON Feed: https://jwatte.com/feed.json Hero image: https://jwatte.com/images/blog-colorado-idaho-state-budgets-taxpayer.webp