Drivers, others face wallet shock

$100 more for car registration among road funding ideas

By Kevin Flynn, Rocky Mountain News (Contact)

Monday, January 7, 2008

Darin McGregor / The Rocky

A worker stands recently on an overpass under construction connecting U.S. 36 to Interstate 76. A blue-ribbon state panel on transportation says it is time for a significant investment in the state's infrastructure.

A healthy transportation network is the lifeblood of the state's economy, Gov. Bill Ritter and others believe, but Colorado voters have a spotty record for providing cash transfusions.

This fall, an electorate that has roundly turned down cheaper highway fixes that wouldn't have raised taxes could be asked to approve significantly more spending.

Didn't like spending $100 million more a year for five years on transportation without paying any new taxes, as was proposed by a referendum voters rejected in 1998?

Then how would you like spending an additional $1.5 billion a year from now on, and pay $100 more each year to register your car, 13 more cents a gallon at the pump, plus a third of a percent more in sales taxes?

It's the opinion of Ritter's 32- member blue-ribbon panel on how to pay for needed transportation programs that at least this much - and possibly even more - needs to be done.

"Keeping up our transportation system is not glamorous or sexy, like building sports arenas and convention centers, but it must be done to ensure our state's future," said Mark Mehalko of DMJM Harris, who served on the panel and is active in the transportation advocacy group Move Colorado.

"Buying transportation is like buying underwear - it is not all that fun, but you have to have it and you want it without holes," he added.

People in the transportation field know the ambitious plan could well be whittled down by political reality.

If their recommendation survives, however, expect it to be attacked by opponents who have been instrumental in defeating past transportation measures.

"There's just no way," said Jon Caldara, president of the Libertarian-leaning Independence Institute and leader of the campaign that beat the less expensive 1998 proposal.

"A $1.5 billion tax burden spread over 4.5 million (people) in the state is a burden of $333 for every man woman and child in Colorado per year," Caldara said. "That's a lot of bike paths, which is very good because after the tax most of us won't be able to afford cars."

But in a state that has cobbled together Band-Aid approaches to roads and transit in the 15 years since voters imposed tax-and- spending limits, the bitter pill is that 21st century transportation needs can't be met with funding formulas from the 20th century, panel members said.

"We all recognize that the deterioration and aging of our transportation network in this state is a growing liability and it is a challenge that is in front of us," state Treasurer Cary Kennedy, one of the co-chairs on the panel, said during a cell phone interview while she was stuck in snowy congestion on the Boulder Turnpike.

"We have used a user-pay system, but since TABOR passed, that system is broken down," Kennedy added.

Revenue ups, downs

The Taxpayer's Bill of Rights was added to the state constitution in 1992. It limits the rate of increase in government spending, requires voter approval of tax increases and - more germane to transportation interests - requires that any money the state collects under existing tax rates be returned to citizens if it is over the allowable limit.

That means in boom times, when more tax revenue comes in, the state might have to return money to taxpayers instead of spending it on critical needs.

Referendum C, passed by voters in 2005, was a five-year timeout from those limits.

Originally estimated to provide the state another $3.7 billion, that amount is now expected to be $6 billion. Much of it will end up going to transportation projects even though Ref C was billed as being for health care, higher education and public schools.

That's because those programs are supported by the state's general fund, which other budget rules say can't grow by more than 6 percent a year, regardless of how much money the state has.

All told, current projections are that the Colorado Department of Transportation could receive a total of $1.8 billion over the five years from Ref C revenue that started flowing in 2006.

Not all of it is due to Ref C, though. CDOT would have received an estimated $500 million even without it. But Ref C makes a higher amount available for transfers to transportation.

Plenty of needs

Needs are all over the boards.

Ritter's transportation panel came up with a minimum package of $500 million more each year in spending called Fix It First, to fund basic maintenance, then recommended funding projects now gathering dust for a total of $1.5 billion a year. They include highway and transit jobs, local roads and streets, projects for both rural and urban areas, and bike and pedestrian improvements.

But transportation interests know they're in a long line with education and health care advocates, who also are lobbying the governor and legislature for more money.

Ritter has said he would back putting no more than one tax question before voters.

"You can address these issues simultaneously with a package that is thoughtful," Kennedy said. "I think the transportation community recognizes that they are a part of the whole, that the state's needs in health care and education are significant as well as transportation, and that they recognize they're part of that whole."

Plans more expensive

Ritter's transportation panel outlined four annual funding plans, each progressively higher, at $500 million, $1 billion, $1.5 billion and $2 billion.

Fix It First, totaling $500 million and taking care of poor roadway surfaces, deteriorating bridges and other deferred maintenance, is the first element of every plan. New projects wouldn't be funded until at least $500 million has gone to maintenance.

"It's really important that whatever we put in front of the voters has the data there to support itself," Kennedy said. "Twenty-one percent of highways have zero service life (and need replacement); 116 bridges are structurally deficient. It's so important to guarantee to the public that they are safe when they travel."

But coming up with such a large amount of new money each year - the total is 50 percent more than CDOT's entire current budget - would entail some eye-popping hits to the public's wallet.

The $100 average increase in the cost of registering a vehicle each year would raise $500 million. As a "user fee" related to road maintenance, it could be imposed by the legislature without a vote of the people.

A 13-cent-per-gallon jump in the gas tax would raise $351 million each year. A state sales tax increase of 0.35 percentage points would raise $312 million. The proposed $6 daily lodging and car rental fee would add $240 million.

Finally, a 1.7 percent increase in the severance tax paid primarily by the oil and gas industry would raise $96 million.

That's a big bite for voters to take. The record in past elections doesn't suggest a good outcome.

Twice since TABOR passed, voters have been asked to let the state pay for languishing transportation projects by using tax revenue it already had collected but would otherwise have to return.

Twice, voters said no.

Another time, voters soundly defeated a 5-cent-a-gallon increase in the state gasoline tax that would have been dedicated to paying for Colorado's 28 most important highway projects.

Only once have voters approved a transportation financing measure, the 1999 TRANS program pushed in his first year in office by former Gov. Bill Owens.

TRANS allowed the state to borrow up to $1.7 billion to jump-start work on those 28 corridors, based on the assumption that it would be cheaper to pay 5 percent interest or less on bonds to do the work quickly than it would be to take an inflation hit of 6 or 7 percent each year in construction costs over a normal 10- or 20-year schedule.

TRANS didn't involve retaining any taxpayer refunds or raising taxes. Instead, it pays off the borrowing with current revenues.

Kennedy emphasizes that maintaining and expanding transportation, including transit, is important to the state.

"We have a legacy to uphold," she said. "I really believe our parents and grandparents and great-grandparents worked very hard to build Colorado to all of the glory that it enjoys today. That is a legacy that we need to uphold. We have an obligation to provide a transportation system that allows the economy to flourish."

Cone zones

The panel that spent eight months at Gov. Bill Ritter's request studying transportation needs and how to pay for them has advocated a $1.5 billion per year spending increase and the taxes and fees to pay for it.

THE NEEDS * Resurfacing $222 million

* Bridges $156 million

* Improved maintenance $82 million

* Add shoulders $78 million

* New capacity projects, including transit $562 million

* Urban transit $36 million

* Rural transit $36 million

* Environmental mitigation $25 million

* Bicycle and pedestrian projects $10 million

* Local roads and streets $293 million

HOW TO PAY FOR IT

* Increase vehicle registration fee $100 on average $500 million

* Raise gas tax by 13 cents a gallon $351 million

* "Visitor" fee on lodging and car rentals of $6 a day $240 million

* Increase state sales tax by 0.35 percent $312 million

* Increase severance tax 1.7 percent $96 million

The series

Gov. Bill Ritter has identified health care reform, transportation and funding higher education as the biggest challenges facing Colorado. The Rocky looks at each of those issues and how the governor and lawmakers plan to address them during the legislative session that opens Wednesday.

* Saturday: Ritter's challenges

* Today: Transportation

* Tuesday: Higher education

* Wednesday: Health care

• January 7, 2008

  6:32 a.m.

  Suggest removal

  Brent writes:

  Congratulations Colorado! You voted them in, now we all get to pay the price. This proposed sweeping increase is outrageous. Where does it end?

• January 7, 2008

  6:51 a.m.

  Suggest removal

  Earl writes:

  lets see here they got twice the money from ref c that they lied about and now they want to raise taxes and add life long fees for car plates. I wonder if they ever thought oc cutting a program or two that really dont need funding? nope that woundnt work as government by the liberals is all about taking more tax money from you because they know how to spend your money better than you do.
  cry me a river on education as they must have forgot amendment 23 that is on auto raise every year no matter what and they still want more.

• January 28, 2008

  3:04 p.m.

  Suggest removal

  vudumom writes:

  Thanks to all you idiots out their who actually thought a Democratic legislature and Governor were really going to make a difference and we would all live happily ever after.
  I'm skocked that the Democratic government in this state would raise taxes.(sarcasism)
  Stupid,stupid,stupid,stupid.