Live updates: Senate passes first of Democrats’ revenue bills as AI negotiations continue

Colorado’s special legislative session resumed Monday as lawmakers work to address a nearly $800 million budget shortfall and to solve a more protracted, muddy debate about the state’s artificial intelligence regulations before they take effect.

This story will be updated throughout the day.

7:10 p.m. update: We have a fresh story recapping the day’s major developments:

Another artificial intelligence deal collapses — as Colorado lawmakers’ budget fixes near finish line

5:21 p.m. update: Several hours after he said he’d reached a deal to amend the state’s impending artificial intelligence regulations, a top Democratic lawmaker indicated early this evening that the deal had collapsed. Sen. Robert Rodriguez said he would gut his proposal and instead seek to delay the implementation of the rules that he had initially sought to rewrite.

That delay means the legislature will again be asked to take up AI regulations when the House and Senate meet for a regular session in January.

Rodriguez, a Denver Democrat and the Senate’s majority leader, told members of his caucus that various people involved in the AI negotiations couldn’t reach a deal on who should bear the legal blame when an AI-powered service is used in a way that violates the state’s antidiscrimination and consumer-protection laws.

He said he was striking the entirety of his bill, which had proposed holding both AI developers and the companies that use their software liable for legal violations. The bill would’ve also required AI services that make consequential decisions — like reviewing job or lending applications — to tell consumers what information went into making that decision.

Instead of that proposal, Rodriguez’s bill will instead now just delay Senate Bill 24-205, the underlying AI regulations sponsored by Rodriguez that passed in 2024. Those rules were set to go into effect next February but would now kick in at the end of June under the altered proposal, giving lawmakers another several months to try — again — to adjust them.

Rodriguez’s announcement came hours after he told The Denver Post that he and his supporters had a “deal on paper” to pass new regulations. But the deal was quickly thrown into chaos because of ongoing disagreements about who should bear the blame when AI discriminates.

The Senate then approved the change gutting the bill. Rodriguez laid the blame for the collapse on tech companies.

“Overnight, the tech industry decided that they were so unhappy with the compromise that had been achieved by consumer-protection organizations, educators, labor and business that they would rather return to the (existing rules),” he said.

3:40 p.m. update: The Senate is taking a break after it cleared most of its legislative plate. That included giving initial approval to the final piece of the Democrats’ package of revenue-raising measures.

House Bill 1004 would authorize the state to raise $100 million by selling tax credits to companies that want to pay their tax liabilities early. The bill passed an initial voice vote in the Senate. It requires a final vote Tuesday, and then the House needs to vote to accept changes made in the Senate. From there, it’s on to Gov. Jared Polis.

The Senate fully passed three other revenue-raisers earlier in the day, sending them to the governor for passage into law. The chamber had cleared the first bill in the package Sunday night. That bill expands the state’s efforts to tax money that’s parked in several foreign tax havens.

According to estimates from nonpartisan fiscal analysts, the five bills would raise more than $253 million this fiscal year, which ends next June. They’re projected to raise even more — $315.6 million — in the next fiscal year.

The $253 million this year amounts to nearly a third of the total $783 million budget gap that lawmakers have been asked to fill. (That estimate is from economists in the governor’s office; legislative staff project the shortfall will be smaller, meaning the $253 million could account for a bigger part of the hole).

Polis’ staff are preparing to address another third of the gap through spending cuts. His office is expected to reveal its planned reductions later this week, after the revenue part has been adopted.

The rest of the hole will be filled from the legislature’s piggy bank. That’ll happen last: Whatever’s not raised or cut will be pulled from the reserves. The governor’s office has suggested roughly $320 million, which would reduce the current reserve level — about 15% of the general fund budget — by 2 percentage points. That would mean his office was planning to propose about $200 million in reductions.

Here’s a more detailed breakdown of the revenue-raisers:

• House Bill 1001: Federal tax law allows for a deduction based on business income. But Colorado has temporarily limited that deduction here in recent years, and HB-1001 would make that limit — which blocks people who make more than $500,000 a year from taking the deduction — permanent. That’s about $45.9 million this year.
• House Bill 1002: This effort cracks down on money held in foreign tax havens. There’s another $35.6 million this year.
• House Bill 1003: Colorado gives a tax incentive to insurance companies that keep offices in the state, but critics have said insurance companies continue to eliminate jobs despite collecting the credit. HB-1003 ends that program. That’s another $44.1 million this year, per the projections.
• House Bill 1004: The measure seeks $100 million from the sale of tax credits.
• House Bill 1005: The state allows businesses to retain money in exchange for collecting sales taxes. HB-1005 stops that program. That amounts to $27.6 million, according to legislative estimates.

1:05 p.m. update: As AI negotiations continue, the Senate passed three of legislative Democrats’ priority revenue-raisers. All of them — House Bill 1001, House Bill 1003 and House Bill 1005 — now go to Gov. Jared Polis’ desk.

The Senate then began debating House Bill 1006, which would sell tax credits to fund a program that seeks to lower the cost of certain health care premiums. Those premiums are set to spike because Congress failed to extend support for the program during the tax bill debate. Senators gave initial approval to House Bill 1004, which also sells tax credits to help fill the larger gap in the state’s budget.

Both of those bills require a final vote in the Senate.

First batch of special session bills heads to Gov. Jared Polis

11:20 a.m. update: Here’s more detail on the AI grand bargain that’s being drafted (see the first update for the machinations behind the deal). According to a fact sheet the deal’s backers are handing out, the deal will reduce how much information must be disclosed to people being screened for jobs or other services by AI. Developers of the technology — who are opposed to this deal — would have to provide assessments to businesses about civil rights risks.

The fact sheet also says the bill would “require developers to share responsibility for discrimination when it flows directly from the technology.” The liability piece of the negotiations has been a key sticking point, and the deal now appears to propose keeping AI developers, along with the companies and government agencies that misuse their tech, on the potential hook for violating state consumer-protection and antidiscrimination laws.

11:11 a.m. update: Good morning from a tired state Capitol, where lawmakers are planning a later start after a weekend of work and, for the Senate, a late Sunday night.

The news of the day is that progressive Democrats and their allies are close to a deal with more industry-aligned interests on revised artificial intelligence regulations, several people involved in those discussions said late Sunday night. The final details and language of that deal are still being ironed out and drafted into language today, but there’s a deal “on paper,” said Rodriguez, the chamber’s majority leader and the sponsor of one of the AI bills.

His bill, Senate Bill 4, passed a first floor vote in the Senate on Sunday night, with notable amendments. The proposal broadly seeks to prevent discrimination by AI when it’s used to screen applicants for jobs, loans and university enrollment, among other things.

SB 4 is now being significantly — perhaps entirely — rewritten as of this morning, and a new version is expected to be considered by the Senate during a final vote in that chamber later in the day.

Rodriguez said Sunday night’s amendments were made before the deal was tentatively reached. He indicated that the two major sore spots in the bill — the amount of detail companies must provide to consumers about what information AI draws upon and who bears liability when AI discriminates against someone — were in advanced negotiations.

SB 4 is backed by progressive lawmakers and groups like the American Civil Liberties Union and labor unions. But it’s opposed by AI developers and the companies that use their technology. They share concerns about who should bear responsibility if AI systems are found to have discriminated against an applicant.

Rodriguez and others involved in the negotiations indicated that opposition was beginning to split over that question. The tentative deal still assigns liability to either tech companies or the businesses and government agencies that use AI, he said, depending on who was the source of the discrimination.

“I now look at this as three groups,” Rodriguez said this morning of the negotiations. “You have labor, civil groups; you have the smaller (venture capitalists) and some small tech; and then you have Big Tech and some small-medium tech, and they all don’t agree. Two sides have aligned, and one’s on an island.”

To be clear, he means deployers of AI and consumer groups are moving closer together, while Big Tech is unhappy with the liability parts of the deal. Indeed, those tech companies are drifting toward the state’s current regulations, which everyone has — up until this point — hated.

Colorado legislature stutters and starts on tax bills as negotiations swirl on AI regulations

To quickly recap: Colorado passed regulations during the 2024 legislative session that are aimed at curbing discrimination by AI systems involved in making “consequential decisions,” like screening job, university or banking applications. They’re currently on track to take effect next February.

But those regulations have been criticized from across the spectrum, and Gov. Jared Polis directed lawmakers to tackle them during this special session that’s otherwise focused on the fallout of President Donald Trump’s tax bill.