By Nash Herman and Jake Fogleman
Executive Summary
- In 2022, Proposition FF created Colorado’s Healthy School Meals for All (HSMA) program, offering free school lunches to all students regardless of family income, funded by capping state income tax deductions for households earning over $300,000.
- The program’s costs far exceeded expectations in its first year, creating a $56 million shortfall despite earlier warnings that it was likely to be unsustainable.
- Proposition LL would let the state permanently retain and spend excess revenue from Prop FF, exempting it from TABOR refund limits going forward.
- Proposition MM would institute another income tax hike by further lowering deduction caps, while also diverting some new revenue to fund SNAP.
- Neither Prop FF nor Prop MM indexes the $300,000 income threshold to inflation. That means the new tax would apply to a greater number of Coloradans each year as wages rise.
- If voters reject both measures, SB25-214 ensures that low-income students continue receiving free meals, returning the program to its sustainable, pre-pandemic model.
Introduction
Coloradans only have two ballot measures to consider this year in the 2025 election, and both pertain to the state’s Healthy School Meals for All (HSMA) program.
The first, Proposition LL, would allow the state to retain and spend excess revenue collected in FY2023-24 and all future years to continue funding HSMA.
The second, Proposition MM, would increase state income taxes for certain individuals to boost funding for the HSMA program and increase state funding to the Supplemental Nutrition Assistance Program (SNAP).
This analysis will explain the purpose of Proposition FF, which created the HSMA program, why the state government now believes that the two 2025 propositions are necessary, and what the alternative would be if voters choose to reject Propositions LL and MM.
Background on Proposition FF and HSMA
Before the COVID-19 pandemic, approximately 41 percent of students in Colorado were eligible for free or reduced lunch. In real terms, of Colorado’s 912,000 PK-12 student population, 300,000 students were eligible for free lunches, and 71,000 were eligible for reduced lunches. However, even students who were only eligible for reduced lunches according to federal guidelines could receive free lunches because the state filled the gap.
During the pandemic, the federal government covered the entire cost of providing free school lunches to all students, regardless of family income, in the 2020-21 and 2021-22 school years.
However, instead of reverting to pre-pandemic funding for at-need students after the pandemic, the state legislature committed to continuing to cover the cost of school lunches for all students regardless of household income with the passage of Proposition FF, which created the HSMA program.
To fund the increased expenses, Proposition FF raised taxes on Coloradans earning over $300,000 by capping state deductions at $12,000 for single filers and $16,000 for joint filers. This amounts to around 200,000 (or 6 percent) of state tax filers. Initial estimates anticipated that the measure would increase state income tax revenue by $100.7 million in the 2023-24 budget year. The program was expected to cost between $71.4 million and $101.4 million once fully operational.
The costs of the HSMA program were underestimated, despite warnings that many parents would predictably opt their children into school lunches to lower their personal financial burdens. Enrollment far exceeded expectations, resulting in a significant increase in costs. By March 2024, legislators were informed that program costs were anticipated to exceed expectations by $56.1 million in FY2023-24, the first year of operation.
Because the HSMA program immediately proved unsustainable at current revenue and spending levels, lawmakers introduced a bill during the 2025 legislative session to refer two new measures to the ballot, aiming to rescue the beleaguered program. The ultimately passed House Bill 25-1274 birthed Proposition LL and Proposition MM.
Proposition LL
The first ballot measure created by HB25-1274, Proposition LL, would allow the HSMA program to retain and spend overcollected funds that would otherwise be returned to taxpayers.
The Taxpayer’s Bill of Rights (TABOR) is a constitutional provision that requires voters’ consent before the government may increase or create new taxes. It also requires that government revenues may not grow beyond a formula of population plus inflation, with any excess revenue returned to taxpayers. For new taxes, any revenue collected that exceeds the initial estimate for the program must also be returned to voters, unless approved by a ballot measure.
Proposition LL is such a measure. The 2022 Blue Book estimated that Proposition FF would increase revenue by $100.7 million in FY2023-24. However, the program collected $112 million, or $11.3 million more than initially estimated. Proposition LL, then, asks voters to allow the state to retain and spend the $12.4 million in tax revenue (and interest earned) that was over-collected from taxpayers in FY2023-24. However, Prop LL also fully “deTABORs” Proposition FF revenue moving forward. This means it retains extra tax revenue not only from FY2023-24 but also from all future years.
Aside from allowing the retention of program funds, Prop LL enables the state to maintain current deductions at 2025 levels for those earning over $300,000 annually, which would otherwise be increased next year to mitigate overcollection. The measure would increase state spending by $33 million in FY2025-26 and $67 million in FY2026-27.
Proposition MM
The second ballot measure created by HB25-1274, Proposition MM, would increase taxes on those already funding the HSMA program to close its budget shortfall.
Proposition FF initially funded the HSMA program by taxing households with annual incomes exceeding $300,000. Proposition MM would increase taxes on those households by reducing the state deduction limit to $1,000 for single filers and $2,000 for joint filers, thereby raising an estimated additional $95 million per year for the program.
It is worth noting that, according to the Colorado Department of Revenue, Coloradans earning over $200,000 annually (8.4 percent of households) already paid 48 percent of the state’s income tax in 2020, before the HSMA was even created.
Legislators also added an amendment to Proposition MM during the state’s 2025 special session to direct some of the HSMA funding to the Supplemental Nutrition Assistance Program (SNAP) in light of program changes caused by the federal One Big Beautiful Bill Act (OBBBA).
OBBBA’s changes to the SNAP program were expected to immediately reduce enrollment and increase costs if the state desired to maintain its current obligations to the program. The changes to SNAP that most significantly impact the state budget include increased state administrative costs and a higher state benefit share, both due to the program’s high payment error rate.
Because the $95 million expected to be raised by MM would exceed the current program’s $56 million shortfall, it is unsurprising that the state would desire to utilize extra HSMA funds to cover the increasing costs associated with SNAP.
Tax Hikes on Autopilot?
It is crucial to note that Proposition FF never indexed the income threshold for triggering new obligations for Coloradans’ funding of HSMA to inflation or any other growth mechanism. Because the cutoff is not indexed, inflation and wage growth over time will cause more households to cross the $300,000 threshold, expanding the population affected by the tax hike without any additional legislative action or new voter approval.
This tax base creep has already become apparent since the program’s creation. According to the Proposition FF analysis from 2022, the measure would only affect about 5 percent of income tax filers in the state. According to the Prop MM analysis, the measure would affect about 6 percent of income tax filers.
It is understandable that, over time, incomes increase, and more households will earn over $300,000. However, due to inflation, Coloradans earning $300,000 in 2025 have less buying power than those who were making $300,000 in 2022. In fact, those earning $300,000 in 2025 have the same buying power as those making $274,253 in 2022 due to inflation, meaning its tax base is already broader in real terms.
Proposition FF was sold to voters as only affecting a small, very wealthy portion of the state. However, should Prop MM pass, an increasing number of Coloradans will see their taxes increase over time to pay for the program.
SB25-214
State lawmakers during the 2025 legislative session also passed Senate Bill 25-214 as a contingency measure in case Propositions LL and MM fail at the ballot box. The bill would scale back the HSMA program to fund free school lunches only for eligible students if the total program funding, including both new and retained funds, does not exceed $150 million. Thus, funding for school lunches would return to pre-pandemic obligations, meaning that low-income students in need of free school lunches would continue to receive them.
Conclusion
Propositions LL and MM ask voters and taxpayers to rescue a universal school meal program that was unsustainable from its inception. Instead of returning to a targeted approach focused on serving students in need, the measures seek to increase taxes without TABOR limits or inflation protection, expand state spending, and entrench a new middle- and upper-class entitlement program.
Importantly, a rejection of Propositions LL and MM would not jeopardize free or reduced lunches for eligible students. It would simply restore the program to fiscal reality and reaffirm Colorado’s commitment to tax fairness.
