Hickenlooper Seeks Change to Colorado Law That Stifles Funding for Transportation

AASHTO Journal, 24 April 2015

Colorado Gov. John Hickenlooper has asked leaders of the General Assembly to change state law that he said is preventing what would otherwise be annual infusions of hundreds of millions of dollars from the state’s General fund into the transportation system.

The governor, in an April 16 letter to top lawmakers, said a law the legislature passed in 2009 during the recession “established a formula that would, as the economy recovered, direct specific amounts of General Fund revenue to capital construction and transportation.”

However, the state has a “Taxpayer’s Bill of Rights” law that caps state revenue and requires rebates to taxpayers under certain conditions. Hickenlooper explained that a separate “hospital provider fee” the legislature also approved in 2009, which is levied on hospitals to qualify for federal matching health care funds, is inflating the revenue cap to swell tax rebates and cut the transfers to transportation.

This means, he said, “that the transfers to high priority transportation projects will be reduced to half the potential amount” in the fiscal year starting in July – from $205.2 million to $102.6 million – “and depending on the forecast, eliminated in future years.”

The governor told legislators the complex budget situation has cut transportation spending for years. “General Fund support for transportation has a long history in Colorado, but no transfers have occurred since FY 2007-08,” he said.

Meanwhile, Hickenlooper said, the state has missed chances to invest in transportation projects that support the state economy.

“Though Colorado has been blessed with robust growth for the past few years, the declining purchasing power of the fuel tax and the impact of the recession have both affected our transportation system,” the governor said. “The financing system has struggled to keep pace with the increase in passenger and freight vehicle traffic.”

Hickenlooper proposed that lawmakers act quickly to reclassify the hospital provider fee receipts as income for a dedicated enterprise fund, since “they are discretely earmarked for health care only” and would thereby no longer increase the broader revenue cap. He proposed letting the full, scheduled tax rebates go forward for the current and next fiscal years, but said the changes would quickly boost transportation transfers.

He emphasized gains the state could receive by changing the law to allow those General Fund transfers. “By securing the return of funding for transportation we can start building a mix of new high-priority transit and highway projects.” Hickenlooper said the Colorado Transportation Commission has identified 50 major projects at a total cost of $2.3 billion that “will ease congestion and prepare Colorado for the influx of people and goods we know are coming in the future.”

Hickenlooper described his plan as an investment that “will benefit Colorado for years to come and will spur economic growth in key transportation corridors – both rural and urban – and in adjacent communities.

The Denver Post in an editorial called the proposal a “Hail Mary” by Hickenlooper, but said it was “worth trying” unless lawmakers have a better idea.

Now, the newspaper said, “revenues that are already being collected and are desperately needed for transportation and for education funding … are diverted into tax refunds,” with the result that “funding for high-priority projects could be eliminated during an economic expansion.”

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