Bill to raise sales tax for transportation passes first test

Lawmakers worked into the evening Wednesday to find the best way, or perhaps the least objectionable way, to begin to fund a backlog of $9 billion in transportation projects that reach into every corner of the state.

The House Transportation and Energy Committee got its first look at a bill that would hike the state sales tax from 2.9 percent to 3.52 percent to pay for transportation projects managed by the Colorado Department of Transportation (CDOT), plus funding for sidewalks, bike paths and mass transit. The measure passed on a party-line vote just after 9:30 p.m., with the committee’s eight Democrats in favor and five Republicans opposed.

The measure was rolled out on March 8 to strong opposition from conservative Republicans at the state Capitol and from limited government advocates like the libertarian Independence Institute and the Koch brothers-funded Americans for Prosperity. But the measure has the sponsorship of state Capitol leaders, including Republican Senate President Kevin Grantham of Cañon City, Democratic Speaker of the House Crisanta Duran of Denver and the chairs of the House and Senate transportation committees.

The measure got its first public airing Wednesday in the House committee. Seventy-nine people signed up to testify on the bill, and at least three dozen amendments were hinted at, promising a late night for lawmakers.

The bill drew little opposition, with most witnesses saying they would instead prefer to see changes in the bill. Among the few to oppose the measure: Dennis Larrett of Littleton, who said the state’s roads and bridges could be funded without a tax increase if CDOT better managed its money. That’s a nod to conservative Republicans who advocate for tightening the state budget in order to find the dollars for transportation projects. And a sales tax is a regressive tax, Larrett said, meaning it would disproportionately hurt the poor, who spend a greater share of their income on sales taxes. Also opposed: Dirk Draper of the Colorado Springs Chamber of Commerce and Economic Development Council, who said the sales tax hike would put his community’s total sales tax at 9 percent, which he said isn’t competitive with neighboring communities.

As introduced, the proposal would ask voters to approve the sales tax increase, which would be expected to raise at least $313 million in 2017-18 and double that in the following year. If approved by voters, $300 million of the revenue generated by the sales tax would go to CDOT to pay for an estimated $3.5 billion in transportation bonds. Of what’s left, 70 percent would be directed to counties and municipalities for local transportation needs. The last 30 percent would be placed into a “multimodal transportation options fund” that would pay for pedestrian and mass transit projects.

From the testimony offered Wednesday, there’s plenty to like and just as much to dislike, and the bill’s House sponsors were ready to make changes from the get-go.

Several witnesses pointed out that under the bill, the $300 million for CDOT doesn’t increase over the 20-year lifespan of the transportation bonds, although costs certainly will increase over time. Duran said she would support increasing the agency’s share to $375 million.

Then there’s the issue of the multimodal fund, with some, such as representatives of the trucking industry, claiming 30 percent was too much and that voters wouldn’t likely support anything over 20 percent.  But a mix of mayors, conservation and disability groups countered that by saying those funds will be needed to cover transportation needs for seniors and the disabled.

Mayor Cathy Noon of Centennial told the committee that suburban residents are aging and increasingly concerned about how they’ll get around once they can no longer drive. RTD is not yet a strong option for suburban communities like hers, she said, noting there’s only one bus line that runs in the area. For those reasons, Noon said she supports funding for local transportation needs.

Noon wears a second hat, as chair of the Colorado Metro Mayors Caucus, which includes 41 metro-area communities. She said the caucus isn’t 100 percent in agreement with the bill, and it’s taken time for everyone to get on board with the idea of hiking the sales tax. “It’s not our first choice but it might be our only choice,” she said.

Multimodal funding also got the backing of a group of mayors from the north metro area, such as Heidi Williams of Thornton and Randy Ahrens of Broomfield. “I encourage you to protect new revenue for multimodal projects and that does not cannibalize the state budget for K-12 education, higher education and health and human services,” Ahrens told the committee.

However, the measure has run into a little trouble with one of the major backers of a statewide transportation solution. According to a Monday statement from Fix Colorado Roads, the proposal falls short in key areas. That includes a failure to “provide sufficient, significant and equitable resources to the state system from the new revenue source, failure to include a reasonable level of existing general funds and failure to identify a list of projects from which the citizens of Colorado will benefit.” That applies to CDOT’s funds as well as to the municipal and multimodal projects.

That lack of transparency could lead to a “free-for-all” competition for project funding, the group said. Lacking a specific list, the measure should at least include specific criteria for how projects are chosen.

The point about transparency raises the specter of the last time Colorado voters were asked to okay transportation bonds, in 2005, with Referendum D. While voters approved a companion measure, Referendum C, which provided a partial time-out on revenue covered under the Taxpayer’s Bill of Rights, the lack of solid information on just how Referendum D funds would be spent doomed the measure, and it failed 50.62 percent to 49.38 percent.

Fix Colorado Roads also said the measure appeared to prioritize multimodal projects over those in the state transportation system. And the bill’s locked-in $300 million for CDOT’s bond repayments wouldn’t allow CDOT to keep pace with growth, while the other two pots of money – multimodal and local projects – would grow with state sales tax revenues. The elimination of another transportation funding stream from the state’s general fund, known as 228 transfers, also is a concern for Fix Colorado Roads, which is expected to play a major role in advocating for the 2017 ballot measure.

The hearing drew dozens of witnesses as well as onlookers who packed several overflow rooms in the basement of the state Capitol. But by the time witness testimony concluded around 7:30 p.m., the overflow rooms were empty. The committee finished up its work at around 9:30 p.m. and sent the bill on to the House Finance Committee.

Photo credit: Let Ideas Compete, via Creative Commons license, Flickr