Colorado lawmakers face a dual challenge as they return to the State Capitol on 21 August for a special session: closing a$1.2 billion budget shortfall and revisiting a pioneering yet controversial law regulating AI.

Senate Bill 24-205, signed into law in May 2024, aims to reduce bias in AI decision-making affecting areas such as lending, insurance, education, and healthcare. While not due for implementation until February 2026, critics and supporters now expect that deadline to be extended.

Representative Brianna Titone, one of the bill's sponsors, emphasised the importance of transparency and consumer safeguards, warning of the risks associated with unregulated AI. However, unexpected costs have emerged. State agencies estimate implementation could cost up to$5 million, a far cry from the bill's original fiscal note.

Governor Polis has called for amendments to prevent excessive financial and administrative burdens on state agencies and businesses. The Judicial Department now expects costs to double from initial projections, requiring supplementary budget requests.

Industry concerns centre on data-sharing requirements and vague regulatory definitions. Critics argue the law could erode competitive advantage and stall innovation in the United States. Developers are urging clarity and more time before compliance is enforced.