Tax increase proposed for transportation
Question may be on fall ballot; governor expects bill revisions
DENVER — A bill introduced into the Colorado Legislature late Wednesday calls for a measure to be placed on this fall’s ballot to raise taxes for transportation projects.
The measure, HB1242, is part of a compromise between Republicans who control the Senate and Democrats the House to create a long-term, sustainable funding stream for transportation projects.
The Colorado Department of Transportation has estimated the state needs about $9 billion to pay for existing maintenance and needed road projects.
Though House and Senate leaders did not make themselves available to discuss the bill — they plan to do so later today — Gov. John Hickenlooper said any successful measure would have to include some sort of bonding.
Still, the governor said he expects the bill to “dramatically change” over the next few weeks.
“Leadership in both the House and the Senate have spent a lot of time on it,” he said. “But it will probably evolve as more people enter the discussion. This is something that the state needs, and I don’t like that it should be a partisan issue. We want to try to get this issue to be above partisan politics.”
The bill calls for a 0.62 percent increase in the state’s sales tax rate, which currently is at 2.9 percent. It also calls for a corresponding reduction in some fees and fines motorists pay when registering their vehicles.
Those fees have been a major bone of contention for legislative Republicans ever since they were implemented in 2009 when the Legislature was controlled by Democrats.
Democrats that year approved the Funding Advancement for Surface Transportation and Economic Recovery Act, also known as FASTER. At the time, Democrats said the new fees were needed, in part because there was no political will to place a measure onto the ballot to increase the state’s gasoline tax, which has remained at 22 cents a gallon since the Taxpayer’s Bill of Rights was approved in 1992.
The FASTER fees and fines on late registrations generate about $200 million a year in revenue, money that has been used to fund countless road projects statewide, according to CDOT.
The measure calls for a decrease in the road safety surcharge that motorists pay, lowering by about $75 million revenues the state collects from it. How that translates for each motorist was unclear under the bill.
Proponents of a ballot measure calling for a new funding stream to pay for transportation projects have long said that it’s better to increase the sales tax rather than the gas tax, because that latter tax has been dwindling in recent years as vehicles become more fuel efficient.
“This is a critical first step in addressing the significant needs to alleviate congestion and address safety concerns across the state,” said Sandra Hagen Solin, spokeswoman for Fix Colorado Roads, an advocacy group that has been pushing for such a measure. “Any transportation proposal must not only be politically palatable to pass our divided Legislature, but must also be politically viable to voters. The deal, as we understand it, attempts to strike the right balance between the priorities of the leaders in both houses while considering what might be viable with voters.”
The measure introduced Wednesday also has a bonding component because it would take too long for the state to amass anything substantial from the small sales tax hike.
Hickenlooper said that part of the measure is crucial.
The measure calls for issuing up to $3.5 billion in bonds. The increased sales tax would be used to pay off those bonds over the next 20 years, at which time the sales tax increase would end and revert back to current levels.
The governor also said that whatever proposal is sent to voters should include specific details of what projects would be funded, and that some sort of multimodal component should be included, such as mass transit.
“I’m not concerned about any of the components of whatever this bill looks like, I will be concerned if cuts are deeper than I would consider prudent if we’re not able to provide certain mobility,” Hickenlooper said. “There does have to be (transportation) priorities and they have to be listed. The voters deserve and they are going to demand knowing what they are paying for. We should lay out what’s going to happen.”
Rep. Diane Mitsch Bush, D-Steamboat Springs, said the bill will do that. She said the measure will include road projects across the state.
The bill is expected to raise about $677 million a year, some of which would be given directly to cites and counties to help pay for some of their own transportation needs.
Though House Minority Leader Pat Neville, R-Castle Rock, hadn’t yet seen the bill, he said any measure sent to voters in November should be “revenue neutral,” at least in the first year.
Like Senate President Kevin Grantham, R-Canon City, Neville said he would not support anything that merely hiked taxes without also requiring a corresponding drop in other costs to voters, such as a reduction in the gasoline tax.
“If it is a change-the-equation type of thing that is revenue neutral, I completely agree that transportation needs more funding,” Neville said. “If it shifts more money to transportation, I am absolutely open to that. If it’s revenue neutral year one, I’m open to it. Year two? We don’t know what that’s going to look like. The current system is a declining revenue source, so we do have to look at other options.”
The bill is to be first heard in the House Transportation & Energy Committee.