A coalition of business organizations is getting ready to unveil an alternate plan to raise vehicle-registration fees and tack new fees onto electric vehicles and new state residents to pay for major state highway needs.
The move comes just a week after the Denver Metro Chamber of Commerce submitted four potential sales-tax hike initiatives to fund transportation.
The competing organization — which includes Colorado Concern, the Colorado Motor Carriers Association and the Colorado Springs Chamber of Commerce and Economic Development Corp. — will ask legislators to place a proposed hike in the Specific Ownership Tax on the November statewide ballot and to agree to commit as much as $300 million per year in general-fund revenue to the road funding effort.
Those two actions combined can generate between $600 million and $800 million per year, funding bond sales of between $5 billion and $10 billion that would wipe out most of the state’s $9 billion backlog of major improvements on arteries like Interstate 70 through the mountains and Interstate 25 between Fort Collins and Denver.
The effort faces major hurdles in the Legislature. Democrats have been reluctant to commit so much money from the general fund toward transportation and Republicans unsuccessfully fought the last hike in vehicle-registration fees, in 2009.
It also could set up competing ballot initiatives for voters to consider, a situation that likely would make it harder to pass both the new measure and the Chamber’s sales-tax hike.
But supporters say that polling suggests a hike in the sales-tax for roads is dead on arrival with voters. But voters have expressed a willingness to pay more in direct fees that would go to improving roadways. That, the organization argues means this new effort stands a much better chance of passage in November and of bringing much-needed relief to the state’s aging and congested transportation infrastructure.
“We’ve been out there sampling the public. And there’s support for it if it’s handled correctly,” said Greg Fulton, president of the Motor Carriers Association, which represents professional truckers. “It’s about how this is designed and presented.”
Legislators have tried and failed for three years to increase funding for transportation. The Republican-majority Senate committee last year rejected a proposed sales-tax hike that would pay for billions of dollars in improvements to state highways, local roadways and transit/bike options. This year’s major effort, a Senate Republican plan to commit $300 million a year from the general fund to transportation and use that to seek voter approval to sell $3.5 billion in bonds for major highway expansions, is stalled because House Democrats and Gov. John Hickenlooper say that such a large commitment of state resources could imperil other areas of the budget if the state experiences a recession in the near future.
Denver Chamber leaders and a coalition of business and civic groups submitted four potential ballot measures February 22 that would raise the state sales tax anywhere from half a cent to a full cent and earmark the revenue to repay between $4.1 billion and $8.4 billion in bonds. While 45 percent of that money would go to state highways, 40 percent would go to county and city governments for their needs and 15 percent would be set aside for multi-modal transportation projects such as transit.
While chamber leaders received praise for making some effort to tackle the problem, a number of groups have raised concerns.
Rachel Beck, vice president of government affairs for the Colorado Springs chamber, noted that her city and a number of others already have raised local sales taxes to fund local roadways, making it extremely unlikely that those citizens would be willing to raise their taxes again. She noted also that without the Legislature being willing to put in a substantial amount of money to roads from its general fund, poll support for passing any kind of statewide tax hike fell by 10 to 15 points.
Fulton, meanwhile, noted that polling shows a lack of nexus for many people between a sales-tax increase and road funding. Increasing vehicle-registration fees through the specific ownership tax makes sense to people even in conservative areas, however — as long as the state chips in money, he said.
“There’s consensus on the need for action to fix the growing traffic and transportation crisis in this state. My members are focused on trying to find a plan that the people are likely to embrace,” added Mike Kopp, CEO of Colorado Concern. “A long-term fix will mean new revenue, but it also means a major long-term commitment to transportation within the four corners of the budget that the state already collects. And we just want to be systematic and comprehensive to make sure that if we go to the trouble of asking the voters, we have a high level of confidence they will say yes.”
Though details continue to be hashed out, a hike in the specific ownership tax would involve three components:
A new-resident fee assesed on the vehicles of recently relocated Coloradans for the first two years they live in the state;A specific fee on electric vehicles, which now do not contribute any of the gas-tax revenue that is the primary funder of state roadways; and,A slowing of the decline in specific ownership tax that vehicle owners pay with each year their car or truck ages.
Currently, the amount they pay on their cars goes down annually in years two through nine, then cars are assessed an annual fee of just $3 each year after they hit 10 years old, a fee that has remained the same since its establishment in 1970. With cars lasting much longer these days and with decade-old cars making up 55 percent of those on Colorado roads, that cap should be increased, even if gradually, Fulton said.
Denver Metro Chamber president/CEO Kelly Brough said that while she is open to discussing any action that can generate more funding she hopes that continued negotiations will produced just one revenue-raising ballot initiative in November.
But the Denver Chamber-led coalition chose a sales-tax hike for several reasons, she said. One reason for backing a sales-tax hike is because the coalition wants to take advantage of the 84 million people who visit Colorado each year and make them shoulder a portion of the responsibility for fixing roads and transit. Raising fees on state residents wouldn’t do that. Also, revenues from sales taxes can be distributed in this fashion to cities and counties, which is key in having a statewide transportation system that is equally improved.
“The one thing everybody shares is we absolutely have to get increased revenue into our transportation system in the state of Colorado,” Brough said. “What we can’t do is kick the can down the road to next year.”