Lawmakers Slash $130 Million from Colorado Affordable Housing Fund

“Proposition 123 was such an exciting new tool for all of us in the affordable housing field throughout the state of Colorado,” Kimball Crangle said. “To have that now be jeopardized is gut-wrenching.”

Crangle, the Colorado Market President for Gorman & Co., knows the High Country well. Her company builds in rural resort towns where the air is thin and the costs are thicker. Picture a developer standing on a half-finished foundation in Basalt or maybe Glenwood Springs, looking up at a peak that blocks the sun by 4 p.m. in winter. That’s the reality of building here. Higher land costs. Shorter building seasons. A limited labor pool that vanishes when the ski resorts hire their seasonal staff.

These aren’t new problems. They’re the old ones, grinding away every single year. But for a few years, there was a lifeline. Voters passed Proposition 123 in 2022, dedicating hundreds of millions of dollars to affordable housing. Projects that might have stalled on paper suddenly broke ground. Now, that lifeline is being yanked.

Lawmakers are on the cusp of passing the state’s 2026-27 fiscal year budget, and they’re looking at a roughly $1.5 billion shortfall. That’s a lot of money to lose. The gap exists because spending went up, program costs rose, and the Taxpayer’s Bill of Rights kept revenue from keeping pace. To plug the hole, budget writers aren’t just trimming fat. They’re dipping into the state’s rainy day fund. They’re cutting health care benefits. And they’re looking to siphon $130 million from Proposition 123 funding to feed the state’s general fund.

It’s not a random decision. Gov. Jared Polis pushed to redirect around $100 million of that Prop 123 money to close a budget gap for the current fiscal year, which ends on June 30. But the Joint Budget Committee didn’t stop there. They tacked on an additional $20 million. That extra chunk is meant to shore up the general fund for the 2026-27 fiscal year.

Rep. Kyle Brown, D-Louisville, sits on that committee. He’s one of six lawmakers crafting the spending plan. He says cutting Prop 123 wasn’t a choice they wanted to make. But he defends it. The ballot language gave the Legislature the power to redirect these dollars during downturns. It was built into the measure.

“I, too, am committed to making sure that we adhere to the voter intent of this particular proposition and that we are supporting affordable housing,” Brown said during a House committee hearing earlier this month.

The unfortunate thing about Prop 123, he continued, is that it included no new revenue to the state. Because of that, it built in a specific mechanism for transfers. It’s a clever legal loophole, sure. But it feels like a betrayal to the folks who actually need the homes.

Proposition 123 generates around $300 million annually. Siphoning $130 million away is more than a third of the pot. That’s not pocket change. That’s the difference between a workforce housing complex in Delta and a luxury condo in Vail. That’s the difference between a teacher being able to live in the valley where she teaches and driving an hour each way from Hot Sulphur Springs.

Housing advocates warn this will exacerbate the already challenging conditions. Market-rate home prices in the mountains easily climb into the multimillions. If you’re making $60,000 a year, you’re not buying in Aspen. You’re not even buying in Eagle County. You’re renting a room or commuting from a zip code that doesn’t have a Starbucks.

The budget debate is heating up. The “orbital” bills — the pieces of legislation that run alongside the main budget — are where the real action is. And right now, they’re aiming for the affordable housing fund. It’s a targeted strike.

Crangle’s frustration is palpable. She’s seen projects take off. She’s seen the excitement. To have that jeopardized isn’t just a line item in a budget report. It’s a stalled crane. It’s a family that can’t afford to live within an hour of their job. It’s a community that’s becoming a playground for the wealthy and a dormitory for the rest.

The $1.5 billion shortfall is real. The need to balance the books is real. But the cost of that balance is being measured in empty lots and stretched commutes. And while the Joint Budget Committee tacks on that extra $20 million, developers in the High Country are just waiting to see if the money will actually arrive, or if it’s already gone.