Budget staff recommend $614 million emergency reserve; committee flags $100M marijuana tax use for prison purchase

Craig Harper, JBC staff, walked the Joint Budget Committee through the annual TABOR emergency reserve designation memo and the mechanics the General Assembly must use to meet the constitutional 3% reserve requirement. Harper said the State Emergency Reserve must total roughly $614,400,000 for FY26-27 under current forecasts, up about $19 million from the prior year.

Harper explained staff'recommended allocations across the State Emergency Reserve Cash Fund (SERCF) and the Disaster Emergency Fund, and cautioned that while those designations are largely a formality, the committee should be aware that one large OSPB comeback proposed using $100 million from the marijuana tax cash fund to purchase a prison. "If the General Assembly goes forward with that purchase, then you'll need to change these designations," Harper said, noting legal and accounting complications including the treatment of COPs (certificates of participation) attached to facilities.

Committee members probed the practicality and transparency of designations and whether FEMA reimbursements flow back to the source fund. Harper and other staff clarified that earmarks and transfers already made to the disaster emergency fund explain why its balance can exceed historic high annual expenditures, because transfers can be spent over multiple years and are often matched with federal funds.

After discussion, the committee approved the staff recommendations for FY26-27 TABOR emergency reserve designations on a 5-0 vote with one member excused. Members flagged that if the marijuana tax cash fund money is diverted to capital purchases such as a prison, the committee will need to revisit allocations and potentially replace the $100 million designation from other sources.