State lawmakers learned Wednesday what a “long, strange trip” lies ahead in coming up with a transportation funding solution.
The legislature is still “truckin’” on a proposal to raise $695 million per year after a centerpiece funding bill passed its first test on Wednesday. The legislation would fund everything from traffic relief to buses and bike paths.
House Bill 1242 passed the House Transportation and Energy Committee on a party-line vote of 8-5, with Republicans opposing the measure.
It calls for a 0.62 percent sales tax increase to the state’s 2.9 percent existing levy that would fund a priority list of transportation projects identified by the Department of Transportation. Roads and highways face a $9 billion revenue shortfall over the next decade.
Money would also go towards multimodal solutions, including public transit, biking and walking. One of the debates over the bill is how to balance transit with roads and highways.
“People in the private sector see the value that transportation options and choices have for maximizing individual productivity,” said Jessica Yates, a board member of Commuting Solutions, which advocates for multimodal options.
Yates said she has been commuting by bus between Boulder and Denver for 10 years.
“We have all discovered that the bus is a business solution for us because we can work and respond to emails and let someone else do the driving.”
Some, however, believe it would be a waste of tax dollars to invest heavily in transit. Jon Caldara, president of the libertarian-leaning Independence Institute, filed a proposed ballot initiative that would redirect existing tax dollars to roads and highways.
“They want a massive 21 percent tax increase, with a give-away to transit and a slush-fund to bribe local governments,” Caldara said of House Bill 1242.
But Golden Mayor Marjorie Sloan – who spoke Wednesday during a more than seven-hour hearing that required two overflow rooms for observers – pointed out that the last time voters approved a gas tax increase was 1991.
Coloradans born in 1991 have been old enough to vote for eight years; the state’s baseball team at the time was the Denver Bears; and the Grateful Dead were playing Mile High Stadium “WITH JERRY GARCIA!” Sloan pointed out.
In the 26 years since the state last raised taxes to fund transportation, the state’s population has ballooned from 3.4 million to 5.4 million. It is expected to grow by another 50 percent by 2040.
Estimates place the cost of congestion for motorists at a collective $6.8 billion.
“This bill is the closest we’ve come to a statewide solution since 1991,” Sloan said. “Now is the time to come together to allow the traveling public to decide to improve safety and reduce congestion through roadways and multimodal solutions.”
In addition to the 20-year sales tax increase, the bill would also eliminate state vehicle registration late fees in an effort to appease Republicans. The original bill would have reduced the fees, but an amendment Wednesday night eliminated it. A fiscal analyst placed the change at about $20 million per year.
The bill would also reduce ordinary vehicle registration fees, resulting in roughly $80 million in savings for motorists.
The measure would allow for $3.5 billion in bonding to kickstart projects, in which voters would approve a loan for transportation funding.
And it would reallocate $50 million in existing state revenue toward transportation projects.
The tax and bonding components of the bill would need to be approved by voters.
Other efforts could overshadow HB 1242
Some Republicans are working on a supplement to the centerpiece transportation bill that would earmark money for rural Colorado without a tax increase.
A bipartisan effort is underway to restructure the Hospital Provider Fee as an enterprise fund, or government-owned business, to free money for state spending. The fee is assessed on hospitals to force a match of federal health care dollars, which generates about $700 million per year.
By exempting the fee from the Taxpayer’s Bill of Rights, or TABOR, taxpayer rebates that are set aside in the general fund would be reduced, thereby freeing money for spending.
A handful of Republicans are entertaining the idea of restructuring the provider fee if the overall base of state tax revenue is lowered. By reducing the base, which determines the state’s spending cap, taxpayer refunds would be protected, but some money would become available. Lawmakers would still have to come up with existing revenue for transportation.
If a compromise is reached on the provider fee, it’s possible that the deal would crowd out the centerpiece transportation funding proposal.
Concerns with adequate funding and identifying projects
There are concerns that House Bill 1242 would lock in CDOT’s portion of the funding, about $375 million per year, over the 20-year term. Several observers say CDOT’s portion should be set as a percentage of total funding.
Even though the bill has bipartisan sponsorship – with House Speaker Crisanta Duran, D-Denver, and Senate President Kevin Grantham, R-Canon City – many Republicans were hoping for a tax-free approach.
“Before we go and have the conversation with the voters about more of their hard-earned money, we need to look at our existing resources and leverage those before asking them for more,” said Rep. Dan Nordberg, R-Colorado Springs.
There’s disagreement over how to identify projects in the legislation. Some stakeholders argue that the CDOT priority list is insufficient. Many observers believe that if voters are going to approve a tax increase, they need to know what projects they are paying for.
Sponsors have repeatedly pointed out that a list of projects would be made public and an oversight commission would be established. Voters would see the list in a voter guide sent ahead of the election, and it also would be made available online. But some argue that the list of projects should be written into the bill.
Transportation committee chairwoman Rep. Diane Mitsch Bush, D-Steamboat Springs, a sponsor of the bill, highlighted that the oversight commission would include geographical diversity so that not just the Front Range would be represented.
Internal polling suggests that a tax increase for transportation would be hard to sell to voters, as has historically been the case in Colorado. But Duran believes Coloradans are ready to invest in the future.
“This is about generations who will follow us for many years to come,” the speaker said. “About making sure that … the quality of life that we have experienced in this state will be … available for future generations.”