Transportation Funding Finally Gets Attention

Mar 14, 2017 | Uncategorized

Years of inaction by state leaders to properly fund the state’s transportation system may finally be coming to an end.

Last Wednesday Speaker of the House Crisanta Duran (D) and Senate President Kevin Grantham (R) introduced House Bill 1242. The bill would do the following:

  • Refer a ballot measure (or measures) from the General Assembly to the November ballot for voter consideration.
  • Voters would be asked to increase the state sales tax by 0.62 percent from the existing rate of 2.9 percent to 3.52 percent, basically 3 and a half cents on a dollar. This is a 21 percent increase to the state sales tax rate.
  • If passed the tax would be in effect January 2018 through December 2037, a period of 20 years.
  • Funding for transportation would increase by $702 million per year.
  • The first $300 million would go to state projects. Most of that revenue would be used to service the transportation bonds mentioned below.
  • The remaining revenue would be split with 70 percent going to local governments for transportation projects – approximately $216 million in the first year — and the remaining 30 percent – about $92 million – would be for multi-modal projects for local communities.
  • It would also authorize the state to issue up to $3.5 billion of bonds for transportation projects.
  • The measure would reduce the state vehicle registration fee by $75 million per year. The fee on small cars would drop from $23 to $9 and from $28 to $11 on larger passenger vehicles.

My reactions are mixed.

First, this is a long overdue conversation and this represents a major break-through. The state has a $9 billion backlog of transportation needs. This proposal indicates that leaders are willing to address the problem.

The inclusion of bonding is very important. Huge projects like North I-25 require significant resources that cannot be done on a pay-as-you-go basis. And, with construction inflation and the upward tick in the cost of borrowing money, the sooner we build these projects the better.

The Legislature is not dedicating money from the state’s general fund to transportation. In fact, if I am reading this correctly, this bill actually eliminates money that has already been committed to North I-25.

The sales tax increase will be a challenge. Polling shows voters are dissatisfied with the state transportation system but lean toward reprioritizing existing resources to fix it. Proponents will have to explain the gravity of the situation and how limited the funding options are.

The portions for local governments and transit feel too generous. Voters want the STATE transportation system fixed. Passing a STATE sales tax and having over half the revenue go to local projects? That will earn significant pushback.

The $300 million annual share for CDOT may seem like a lot, but it looks like it is locked in for 20 years while the portions for local governments and transit grow. Basically, the group responsible for maintaining and expanding the state transportation system would have a declining revenue source.

This is at least the start of a long overdue discussion. Grantham and Duran are showing leadership.

You can read our analysis of the bill here.