Colorado must balance its budget every year by law. It’s one of those fiscal protections for most states that most Americans would like to see imposed on Congress at the federal level, where the national debt has exploded past $38 trillion.

Imagine a federal Taxpayer’s Bill of Rights, with real spending caps and voter approval for tax hikes.

Still, just because Colorado is barred from deficit spending doesn’t mean it can’t take on debt. In fact, a new report from the Reason Foundation pegs Colorado’s state debt at $43.12 billion — 14th in the nation and the highest in the Mountain West.

With a $4 billion annual budget, the state owes almost as much as it spends in a single year. Per capita, that’s $7,469 of debt per citizen, ranking 19th nationally.

Add in local government (counties, municipalities and school districts), and Colorado’s total tab hits $104 billion, surpassed only by 14 other states.

Most of that is $81 billion in long-term debt due in more than one year. That equates to roughly $14,031 per resident. As report coauthor Jordan Capmbell told The Center Square, that makes Colorado the nation’s 13th highest in long-term debt per capita.

Unlike Washington, D.C., this isn’t debt-financed overspending. It’s structural obligations, primarily bonded debt (45%), unfunded pension liabilities (40%) and unfunded retiree health-care obligations (3%).

Most of that debt is shared between the state government ($28.1 billion) and school districts ($27.5 billion).

Bonds finance things like building new schools or infrastructure upgrades. They’re generally up to a vote of the people, and voters frequently authorize bonds for school districts.

But taking out so much debt poses long-term risks and costs, especially if the economy turns south and strains the ability to make debt payments.

Colorado’s unfunded pensions are attributable to the Public Employee Retirement Association. At the end of the previous decade, the Legislature, led by former Republican state Sen. Jack Tate, passed modest reforms that shored up PERA. 

Colorado ranks 10th for pension debt, and that weight is a glaring reminder to fully fund pensions and retiree health care rather than financing them by borrowing money.

“The outsized share that pension debt makes up of state and local government debt suggests that states should stress-test pension and debt assumptions against market downturns and interest rate shocks,” Campbell warned.

Meanwhile, Reason’s report offers a fresh look at Colorado’s finances since last summer’s special session to plug a $783 million budget hole.

Yes, Congress cut taxes on things like overtime and tips, trimming how much Colorado can collect in hard-earned tax dollars because our state income taxes are based on federal adjusted gross income. But the core problem isn’t revenue — it’s overspending.

Under the Golden Dome, lawmakers have somehow burned through a $3.6 billion surplus just a few years ago, cash they could have banked for a rainy day.

When the shortfall hit, the ruling Democrats didn’t confront spending, as we noted in August. They covered it with fiscal duct tape and accounting gimmicks. They didn’t even try to tighten the belt. Existing programs went virtually untouched. 

No wonder we keep drifting into unfunded liabilities. When government won’t curb everyday spending, taxpayer dollars can’t pitch into long-term obligations like public pensions.

It’s another fiscal wake-up call — and a pity the legislature keeps hitting the snooze button.