Colorado Special Session to Address AI Law and Budget Shortfall

Governor Jared Polis has called a special legislative session in Colorado, set to begin on August 21, to address a significant budget shortfall and consider delaying the implementation of the state's artificial intelligence law. The session aims to tackle the $783 million budget gap resulting from recent federal tax cuts and to discuss potential adjustments to the AI regulations scheduled to take effect in February 2026.

The AI law, signed in 2024, is the first of its kind in the U.S., regulating high-risk AI systems in areas such as hiring and insurance. The law requires companies to conduct bias risk assessments and provide transparency in AI-driven decisions. However, concerns over compliance costs have led to calls for a delay in its implementation until 2027.

During the session, legislators will explore options to close the budget gap, including tapping into the state's reserve fund, cutting spending, or eliminating certain tax breaks. Additionally, the session will consider raising fees on health insurance policies to support the Health Insurance Affordability Enterprise.

The outcome of this session could significantly impact both the state's financial stability and the future of AI regulation in Colorado, as lawmakers work to balance economic and regulatory priorities.