Colorado is one of six states that receive a majority of its tax revenues (52.7%) from personal income taxes, and these are down 25.4% in the first quarter of 2009, from the first quarter a year ago. The state also has no meaningful ability to borrow money without taxpayer approval, and other tax revenues are also down.
The need for social services, however, is up, and the state is state constitutionally prohibited from cutting K-12 education funding. Steep higher education cuts seem likely.
It isn't obvious to me that it is even theoretically possible to cut this Gordian knot within the constraints of actual revenues and the provisions of Colorado's state constitution. At the very least, the state is en route to a dire fiscal crisis.