SB21-260 Sustainability Of The Transportation System (Fenberg (D), Winter (D)) [Garnett (D), Gray (D)]

PASSED

AMENDED: Moderate

Appropriation: $550 million this year, of which $380 million is federal money, more in future years
Fiscal Impact: Beyond appropriations, loss of about $20 million this year, then gain of about $125 million next year, $195 million year after that, and $3.5 billion over next ten years

Goal:

Raise $3.5 billion over ten years through a variety of new fees.

About $1.5 billion through new usage fees on gas (in effect raising the gas tax) with an extra $0.08 per gallon by 2031. Hundreds of millions through new registration fees on electric and hybrid vehicles, with electric vehicles costing $96 by 2031 and hybrids $27 to register. Spend $402 $420 $380 million in state federal stimulus money this year, $170 million in state stimulus money this year, and at least $115 million each year thereafter through 2031 in general fund money. All of this goes to state highway users fund, state highway fund, and multimodal transportation fund.

About $1.2 billion raised through a new fee on retail deliveries, with a $0.27 fee per delivery charged to the consumer in the same way as sales tax. Hundreds of millions raised through a new per ride fee on transportation networks like Uber or Lyft, with a $0.30 fee on non-electric and non-pool rides and $0.15 on electric or pool rides (again treated like sales tax). For the most part, these fees go to fund several new enterprise programs designed to help the state electrify its transportation, which includes building charging infrastructure, helping electrify vehicle fleets (like delivery fleets), public transit and individual vehicles.

All fees gradually rise to their 2021 levels beginning in 2022 and are tied to inflation past 2031.

The bill also repeals a ballot question for the 2021 ballot that would have asked voters to approve a bond initiative for $1.3 billion for transportation needs, eliminates a reduction in the TABOR revenue cap due to a piece of legislation in 2017, and allows for the creation of regional transportation planning organizations which can ask voters to raise taxes in their area to fund transportation needs in their area (RTD is an example of such a organization).

Description:

This is in essence at least 10 separate bills and perhaps 15 all in one massive bill. So we are going to do this a bit differently. Each separate “bill” will have its own header and section both here and in Additional Information. Because the new retail delivery fee and per ride fee impact multiple proposed (and one existing) enterprise, we will discuss them first, then refer again to them where appropriate. An enterprise program is exempt from TABOR, so any revenue brought in by the enterprise does not count toward the state’s annual TABOR cap (which triggers a refund to taxpayers if the state brings in more revenue than the cap). If you are interested in the total revenues, there is a section at the end of the Description that describes total revenues under the bill. Where appropriate, each sub-section has its own revenue information as well.

Retail Delivery Fee and Per Ride Fee

The retail delivery fee is charged to any tangible personal property delivered by a motor vehicle to a physical address in Colorado. Much like sales tax, it is passed on the consumer and then remitted to the department of revenue. In 2022-23, the fee is $0.084 for existing funding streams for state transportation, $0.027 for the bridge and tunnel enterprise (already exists but is called just bridge enterprise right now), $0.053 for the clean fleet enterprise, $0.069 for the community access enterprise, $0.03 for the clean transit enterprise, and $0.007 for the air pollution mitigation enterprise ($0.27 total). After 2022-23 each separate fee is tied to inflation and only adjusted when inflation is positive and will result in an increase of at least $0.01 (bit complicated here and looks like drafting error, but right now the consideration is clean fleet+air pollution mitigation, if those are adjusted then others can also be adjusted, except bridge and tunnel text says all together). Maximum of 5% increases regardless of actual inflation (same as interest calculation). Any deliveries of property that is exempt from state sales tax is also exempt from this fee. $75.9 million raised through this fee in 2022-23.

The Per Ride fee is charged to any prearranged ride through a digital network. Again like sales tax, passed on to customers and then remitted to the department of revenue. In 2022-23, the fee is $0.0375 for rides in a zero emissions vehicle or for car share rides (riders agree to be transported with other separate riders going to other destinations even if another rider doesn’t actually end up being in the vehicle) for the clean fleet enterprise and $0.1125 for the air pollution mitigation enterprise ($0.15 total) and $0.075 for all other prearranged rides for the clean fleet and $0.225 for the air pollution ($0.30 total). Thereafter it is tied to inflation and only adjusted when inflation is positive and will result in an increase of at least $0.01 (cumulatively with both fees considered). Maximum of 5% increases regardless of actual inflation (again cumulatively). $9.7 million raised through this fee in 2022-23.

Restore Referendum C Cap, Associated Appropriations, and Raise Gas Tax

Creates a road usage fee, which is to be added to each gallon of gas sold (on top of the gas tax) of $0.02 a gallon in 2022-23, $0.03 in 2023-24, and an increase of one cent per gallon each year until we reach $0.08 in 2028-29. Then it stays at the level until 2032-33, at which point it is tied to inflation (using $0.08 in 2030 as the baseline). It’s a bit tricky here but the bill also ties the existing gas tax to inflation at that point. The gas tax is $0.22 a gallon and the bill adds whatever the inflation is for the $0.22 to the usage fee (again based on $0.22 in 2030). The exact same operation is applied to special fuels (diesel engine fuel, kerosene, liquefied petroleum gas, and natural gas), which pay an excise tax instead of the gas tax but it’s the same amount, $0.22, right now. $60.1 million raised in 2022-23 through this usage fee. The fiscal note estimates the usage fees will actually cause a decrease in gasoline consumption and so bring in less money each year through the main gas tax (the usage fee is being treated separately), but that could also occur simply due to more widespread adoption of electric vehicles. In any event, the estimate is a $100,000 decrease in gas tax revenue each of the next two years. That nets out to a $60 million increase. This jumps to $91.8 million the next year.

Distributors do not have to pay the special fuel usage fee if they are exporters delivering exclusively to another state or if they already do not have to pay the excise tax thanks to other existing state law.

As a reminder the retail delivery fee also has money going toward these existing funds. This portion is to be divided up with 71.9% going to the state highway fund and 28.1% to the multimodal transportation and mitigation fund (see below for more detail on changes to this fund).

Reverts a change in 2017 that set the TABOR revenue limit lower. This was part of a deal in 2017 that removed a certain hospital provider fee from state revenues by making it an enterprise program. In exchange, the TABOR revenue cap was lowered. By removing that provision, this bill resets the TABOR revenue cap about $225 million higher in 2021-22 and in later years the TABOR limit will be revised as required by the constitution based on that higher amount.

Repeals a scheduled $50 million transfer of general funds to the state highway fund every year through 2040 and replaces it with multiple larger transfers (all from general fund): $329 $347 $331 million million to the state highway fund, of which $161 million is federal stimulus money, $24 $36.5 million to the highway users tax fund, $128 $161.3 million to the multimodal transportation and mitigation fund from federal stimulus funds, and $8 $21.6 million in federal stimulus money to the revitalizing main streets program in the state highway fund ($550.4 million total). Then next year a transfer of $12 million to the highway users tax fund. And starting next year, every year through 2031 a transfer of $10.5 million to the multimodal fund, $7 million to the revitalizing main streets program. There’s still more. Starting in 2024 and then every year through 2031 2028, $82.5 $100 million to the state highway fund, of which $5 $10 million a year must be spent on mitigating environmental and health impacts of increased air pollution from motor vehicles in areas where air quality does not meet federal standards by funding projects that reduce vehicle miles traveled or directly reduce air pollution. From 2029-2031, $82.5 million each year to the state highway fund. From 2024 to 2031, $10.5 million to the multimodal fund and $7 million to the revitalizing main streets program. Starting in 2022 through 2026, at least $115 million and at most 50% of the excess revenue allowed by lifting the TABOR cap (as done above), with 94% going to the multimodal fund and 6% to the revitalizing main streets program.

Change Registration Fees and Impose Electric Vehicle Fee

Ties the existing $50 registration fee for electric vehicles to inflation, with a maximum increase of 5% a year. Adds a new electric vehicle road usage fee beginning in 2022-23 which is also due at registration. This includes hybrids but the fee structures are very different. For pure electric vehicles this begins at $4 in 2022-23, then increases each year, more gradually at first with $4 annual increases until it reaches $16 in 2025-26. Then $10 increases each of the next two years to reach $36 in 2027-28, then $15 each of the next four years to reach $96 in 2031-32. For hybrids, it starts at $3 in 2022-23, then alternates between increasing by $2 and by $3 each year up to 2031-32 at which point it is $27. At that point both fees are tied to inflation with maximum increases of 5% a year. Obviously this starts small, just $300,000 in additional revenue in 2022-23. The fiscal note does not go very far into the future, and obviously wide-spread adoption of electric vehicles is an unknown variable. The official state roadmap is 940,000 electric vehicles by 2030. Assuming no hybrids in that count, that would bring in $90 million at the full $96 fee level. Of course there will be a concurrent plunge in gas but that is extremely difficult to estimate. As a point of reference, right now we bring in $322 million in gas tax revenue each year. Note that the fiscal note expects slight declines even with the increase in the tax, though that might reverse as we get farther out and the full $0.08 additional fee comes online. Remember also that doing nothing would cause declines in gas tax revenue simply through more electric vehicle adoption and ever increasing fuel efficiency standards.

State is to create a pilot program that allows these two usage fees to be paid quarterly on an automated basis.

Also creates a commercial electric vehicle usage fee which is simpler: it is $50 for vehicles over 10,000 pounds but less than 26,000 and $100 for vehicles more than 26,000 pounds. Also starts in 2022-23 and is tied to inflation, again with the maximum 5% increase per year. The fiscal estimate for this is tied in with the other electric vehicle fees.

All of the revenue from these new usage fees goes 70% to the highway users tax fund and 30% to the state highway fund.

Reduces the road safety surcharge on vehicle registration (which goes to the bridge and tunnel enterprise) by $11.10 between 2022 and 2023 and by $5.50 between 2022 2023 and 2024. This will cost the state $33 $49.5 million a year at full implementation (but it is temporary).

Community Access Enterprise

Creates the Community Access Enterprise, which is a TABOR exempt enterprise. Its purpose is to support the widespread adoption of electric motor vehicles by directly investing in transportation infrastructure, making grants or providing rebates or other financing options to fund the construction of electric motor vehicle charging infrastructure throughout the state, and incentivizing the acquisition and use of electric motor vehicles and electric alternatives to motor vehicles in communities. This must include disproportionately impacted communities and owners of older, less fuel efficient, and higher polluting vehicles.

Community access enterprise is to implement grant, loan, or rebate programs to fund construction of electric motor vehicle charging infrastructure that includes:

• Public, workplace, transportation network company, and multi-family applications
• Chargers for communities, including disproportionately impacted communities
• Chargers for medium and heavy duty vehicles, including electrified refrigerated trailers
• Infrastructure for hydrogen fuel cell vehicle power
• Networks and plazas of direct current charging infrastructure that offers fast charging

Grant, loan, and rebate programs also implemented for providing inexpensive and accessible electric alternatives to motor vehicles like electrical assisted bicycles and scooters, support adoption of electric vehicles including incentivizing replacement of high-emitting cars, and to provide incentives to transportation network companies and companies to that rent to them to increase access to overnight charging ability for drivers.

Enterprise also to work with the state’s energy office and department of transportation to develop rules for the air quality commission to consider in furtherance of the enterprise’s purpose.

Enterprise can issue bonds, hold property, employ people and contract with third parties, and seek and accept gifts, grants, and donations (so long as they are less than 10% of total revenue which is required for enterprises). Board consists of seven members who are not compensated but can be reimbursed for expenses.

Enterprise must engage regularly on its projects and activity with the public, especially from disproportionately impacted communities and interest groups that are likely to be interested in its projects and activities. It must create a ten-year plan by June 2022 and post it on its website. This plan must include amount of funding needed. Then in 2032 it must create a new ten-year plan. It must also create and maintain a public accountability dashboard on its website that provides information on implementation of the plan, funding status and progress on each project, and per project and total funding and expenditures. Must report annually to the legislature.

As a reminder, the enterprise is funded by solely by its portion of the retail delivery fee.

Clean Fleet Enterprise

Creates the Clean Fleet Enterprise, which is a TABOR exempt enterprise. Its purpose is to incentivize and support the use of electric motor vehicles by businesses and governmental entities that own or operate fleets of motor vehicles, including situations where the vehicles are owned by individual contractors (like Uber or Grubhub). This can include compressed natural gas vehicles powered by recovered methane as well. This is to involve grant programs, rebate programs, revolving loan funds, or other such strategies the board finds effective, to:

• Help public and private owners and operators of motor vehicle fleets finance electric vehicle acquisition, and if electric vehicles aren’t available in the heavy-duty models required by some, natural gas trucks so long as at least 90% of the fuel for the trucks will come from recovered methane
• Assess and implement cleaner mobile source technology to support electrification of vehicles and fleets
• Coordinate engagement with public entities and owners and operators of motor vehicle fleets to develop strategies for electrifying fleets
• Research and assess innovative and emerging emission strategies for motor vehicles and engines and modernize and improve current testing, inspection, and readjustment services offered by the state
• Provide training and development of a clean transportation workforce to support adoption of electric vehicles in fleets
• Research and develop strategies, business plans, and guidance to support the consistent application of grants and other business services, including remediation services
• Provide outreach, education, and training to support the successful application and performance by entities receiving funds
• Provide or support the delivery of companion services such as fleet testing, inspection, or readjustment services
• Address non-attainment of national air quality standards before even stricter measures are necessary that would impose burdens on fleet businesses
• Address community exposure, including disproportionately impacted communities, and resulting Reduce health disparities from fleet operations in impacted communities
• Help companies that maintain fleets and rent vehicles in those fleets to drivers to purchase or lease electric vehicles
• Help transportation network companies provide incentives for their drivers to use electric vehicles
• Provide additional remediation services to fee payers including incentivization of clean mobile equipment, planning services to support communities, and provide scrappage services

Enterprise also to work with the state’s energy office and department of transportation to develop rules for the air quality commission to consider in furtherance of the enterprise’s purpose.

Enterprise can issue bonds, hold property, employ people and contract with third parties, and seek and accept gifts, grants, and donations (so long as they are less than 10% of total revenue which is required for enterprises). Board consists of 9 members who are not compensated but can get reimbursement for expenses.

Enterprise must engage regularly on its projects and activity with the public, especially from disproportionately impacted communities and interest groups that are likely to be interested in its projects and activities. It must create a ten-year plan by June 2022 and post it on its website. This plan must include amount of funding needed. Then in 2032 it must create a new ten-year plan. It must also create and maintain a public accountability dashboard on its website that provides information on implementation of the plan, funding status and progress on each project, and per project and total funding and expenditures. Must report annually to the legislature.

As a reminder, the enterprise is funded by its portion of the retail delivery fee and its portion of the per ride fee. The enterprise must ensure that during the first ten fiscal years of collections, expenditures that support transportation network company operations equal or exceed cumulative per ride fee revenue (remember that revenue is coming from people using those transportation network companies, like Uber).

Clean Transit Enterprise

Creates the Clean Transit Enterprise, which is a TABOR exempt enterprise. Its purpose is to reduce and mitigate the adverse environmental and health impacts of air pollution and greenhouse gas emissions produced by motor vehicles making retail deliveries by supporting replacement of gas-powered vehicles with electric-powered vehicles, providing the associated recharging infrastructure for electric transit fleet vehicles, supporting facility modifications that allow for the safe operation and maintenance of electric transit motor vehicles and funding planning studies that enable transit agencies to plan for electrification of vehicles.

Enterprise can makes grants, loans, or rebates to fund: clean transit planning efforts, facility upgrades and construction of charging infrastructure for public transit providers, and replacement of gas powered motor vehicles with electric motor vehicles for public transit providers.

Enterprise also to work with the state’s energy office and department of transportation to develop rules for the air quality commission to consider in furtherance of the enterprise’s purpose.

Enterprise can issue bonds, hold property, employ people and contract with third parties, and seek and accept gifts, grants, and donations (so long as they are less than 10% of total revenue which is required for enterprises). Board consists of 9 members who are not compensated but can get reimbursement for expenses.

Enterprise must engage regularly on its projects and activity with the public, especially from disproportionately impacted communities and interest groups that are likely to be interested in its projects and activities. It must create a ten-year plan by June 2022 and post it on its website. This plan must include amount of funding needed. Then in 2032 it must create a new ten-year plan. It must also create and maintain a public accountability dashboard on its website that provides information on implementation of the plan, funding status and progress on each project, and per project and total funding and expenditures. Must report annually to the legislature.

As a reminder the bridge and tunnel enterprise also collect a portion of the retail delivery fee.

Change Multimodal Transport By Adding Mitigation

Renames the existing multimodal transportation options fund into the multimodal transportation and mitigation options fund. Expands the mission of the fund to include reducing emissions of air pollutants, including hazardous air pollutants and greenhouse gasses, that contribute to adverse environmental effects and adverse human health effects. Allows the fund to spend on greenhouse mitigation projects, which are defined as a project that helps obtain compliance with federal or state laws or rules that regulate transportation-related greenhouse gas emissions by reducing vehicle miles traveled or increasing multimodal travel.

Removes existing rules on how money given to the fund must be spent (85% for local multimodal projects and 15% for state multimodal projects right now). Allows the state to exempt local projects on an individual basis from current matching funds requirements.

Appropriates $2.5 million to the fund in 2022 for front range rail.

Non-Attainment Area Air Pollution Mitigation Enterprise

Creates the Non-Attainment Area Air Pollution Mitigation enterprise, which is a TABOR exempt enterprise. Its purpose is to mitigate the environmental and health impacts of increased air pollution from motor vehicle emissions in non-attainment areas (areas where the air quality does not meet federal standards) by providing funding for projects that reduce traffic, including demand management projects that encourage alternatives to driving alone or that directly reduce air pollution, such as retrofitting construction equipment, construction of roadside vegetation barriers, and planting trees along medians. To be eligible, a project must either be eligible for federal highway mitigation funding or reduce emissions of air pollutants or greenhouse gas pollutants.

Enterprise is to award grants. It must actively seek input from communities, including disproportionately impacted communities, and local governments to mitigate environmental and health impacts of highway projects, reduce traffic congestion, and improve neighborhood connectivity for communities adjacent to highways.

Enterprise can issue bonds, hold property, employ people and contract with third parties, and seek and accept gifts, grants, and donations (so long as they are less than 10% of total revenue which is required for enterprises). Board consists of 7 members who are not compensated but can get reimbursement for expenses.

Enterprise must engage regularly on its projects and activity with the public, especially from disproportionately impacted communities and interest groups that are likely to be interested in its projects and activities. It must create a ten-year plan by June 2022 and post it on its website. This plan must include amount of funding needed. Then in 2032 it must create a new ten-year plan. It must also create and maintain a public accountability dashboard on its website that provides information on implementation of the plan, funding status and progress on each project, and per project and total funding and expenditures. Must report annually to the legislature.

Change Bridge Enterprise to Bridge and Tunnel Enterprise

Changes the existing Bridge Enterprise to the Bridge and Tunnel Enterprise. Expands the scope of the enterprise to include tunnel projects that are part of the state highway system.

Creates a new fee on special fuels which is to be added to the excise tax of $0.02 a gallon in 2022-23, $0.03 in 2023-24, and an increase of one cent per gallon each year until we reach $0.08 in 2028-29. Then it stays at the level until 2032-33, at which point it is tied to inflation. This is in addition to the already discussed same $0.08 road usage fee. Distributors do not have to pay the special fuel usage fee if they are exporters delivering exclusively to another state or if they already do not have to pay the excise tax thanks to other existing state law. $15.8 million raised through this fee.

As a reminder the bridge and tunnel enterprise also collect a portion of the retail delivery fee.

Transportation Planning Organizations

Allows cities and rural regions within transportation planning organizations to exercise the powers of a regional transportation authorities, which includes the power to impose charges, fees, and with voter approval, visitor benefit, sales, and use taxes to generate transportation funding. The state is prohibited from considering these authorities and any revenue they are raising when it determines the amount of state transportation funding to be allocated to the areas inside these transportation planning organizations. Doing this requires at least two public hearings prior to adopting a resolution authorizing these enhanced powers.

Adopting resolution must specify the regional transportation systems to be provided and the boundaries of the territory where the transportation planning organization can use their enhanced revenue generation power. This cannot include territory that is not in the transportation planning organization. Cities and counties can opt-into these boundaries if they are excluded.

Repeal Ballot Question on Transportation

Repeals the 2018 law that would have put a ballot measure on the 2021 ballot which would have authorized the department of transportation to issue transportation revenue anticipation notes (TRANs) for $1.3 billion with maximum repayment amount of $1.9 billion. Repeals the current plan of using lease-purchase agreements on buildings (which the 2021 ballot issue would have replaced). There was one final $500 million set of agreements set to be executed next year.

Projects to Increase Transportation Capacity Requirements

Requires the state to propose to the air quality commission procedures and guidelines that require the department of transportation and metropolitan planning organizations to take additional steps in the planning process for transportation capacity projects to account for the impacts on the amount of statewide greenhouse gas pollution and statewide vehicle miles traveled that would result from the project.

Commission to create guidelines and procedures and these must require same level of analytical scrutiny of greenhouse gas pollutants as other pollutants in the state, otherwise reduce greenhouse gas emissions, and consider role of land use to reduce vehicle miles traveled. For any regional project (based on federal definitions), the state must model air pollutant impacts for the project including actual monitoring and measurement where feasible, develop a construction plan that includes timely public alerts when pollutants exceed certain levels, and develop and implement a plan to mitigate air quality impacts on communities, including disproportionately impacted communities.

State must review, update, and improve as necessary its public engagement program for these types of projects with an eye on creating diverse and impactful ways to gather community input around the state in multiple languages and formats.

Revenue

The expectation is that this bill will increase revenue in the state by $3.8 billion over the next ten years. Some of this, the vehicle registration fees and gas tax fees for instance, is subject to TABOR, and some is not (all of the enterprise related fees). By 2023-24 (the latest year the fiscal note analyzes) the bill is expected to bring in $200 million in additional revenue.

Other

The bill also does two things to the short-term rental fee (less than 30 day rentals, fee already exists and is $2). First it indexes it to inflation (with no maximum increases like the other indexes in the bill) and second, it requires car sharing programs to collect the fee on any of their short-term rentals that are longer than 24 hours (think Zipcar or Turo). This is a daily fee and will bring in $900,000 in 2022-23 and $2.4 million in 2023-24.

Unless different methods are required by law, requires those same three agencies to use a maximum discount rate of 2.5% when calculating the social costs of greenhouse gas pollution and use the most recent federal estimate of the cost per ton.

Studies and Reports

The bill requires the state energy office, the department of public health and environment, and department of transportation to collaborate annually on a report to the legislature on progress being made toward the electric vehicle adoption goals of the state (940,000 by 2030). First report due in 2023.

Requires the public utilities commission to conduct a study to assess whether there is parity between certified taxi carriers and transportation network companies (like Uber) with respect to their contributions to the funding of the transportation system. The study must be done in 2022 so as to assess the new per ride fees on transportation network companies (which taxis do not pay). Commission must take into account any relevant differences in business models, regulatory burdens (taxis are much more regulated), and impacts on the sustainability of the transportation system. Report due during 2023 interim (between 2022 and 2023 sessions).

Requires the department of transportation to study the feasibility of implementing a road usage charge program. This involves looking at other states, identifying and assessing available technology for tracking mileage, identify barriers to implementing a road usage charge program and options for overcoming these barriers, and identify ways to coordinate with other states who have road usage charge programs to leverage their expertise. Report due during 2023 interim.

Requires the department of transportation to study issues relating to the development and adoption of autonomous motor vehicles (self-driving cars). Study must summarize the current status of technology and the extent of its use, provide an estimated timeline for future advancements and adoption, summarize the anticipated safety benefits and risks, identify any modifications or additions that existing infrastructure may need as well as the timeline and costs of such modifications, and identify and summarize any legal issues related to autonomous motor vehicles. Study due during 2025 interim.

In 2026 the state energy office, department of transportation, department of public health and environment and all of the enterprises in this bill must write a joint report on their progress for the legislature. Report must detail all projects completed and identify projects expected to be completed in next five years. It must additional recommendations for general fund money and if all of the new fees on electric vehicles need to be adjusted to maintain the goal of parity between electric vehicle owners and gas-powered vehicle owners (who pay the gas tax) when it comes to transportation funding.

Additional Information:

Auto-Repeal: n/a

Arguments For:

Bottom Line:

• We have a known and massive funding gap in our transportation system because we haven’t raised the gas tax in 30 years, which has resulted in one of the major sources of funding dwindling over time so that now we are $0.06 below the national average (on a $0.22 tax so that’s a lot) and only 12 states in the country have lower gas taxes
• This has resulted in us simply not being able to keep up with our transportation needs. The state has $5 billion in needs over the next ten years that are not fully funded, not to mention all of the road maintenance and repair work
• Solutions other than increasing ongoing funding are band-aids that will leave us in the same place in a few years. We also have to account for the increasing number of electric cars that of course don’t pay the gas tax at all
• So the bill raises the gas tax through an additional fee, adds a new fee on electric vehicles, and raises the TABOR revenue cap back to its constitutionally approved level (the previous lowering was done without voter input) so we can keep the extra revenue coming in
• It also pours a ton of stimulus money into transportation, so it is not accurate to say we aren’t doing that too
• Allowing for regional transportation planning organizations allows for local jurisdictions to not be held up by the rest of the state if they want to increase transportation funding in their area through increased taxes
• We also must address the emissions coming from transportation if we want to reach our climate goals (to avert climate catastrophe, current conditions in the state with massive wildfires and mega droughts are already bad enough, we cannot afford for it to get worse). Transportation is poised to become our largest single source of emissions soon
• That means mass electrification, including of fleets of vehicles (like delivery fleets), public transportation, and personal vehicles. It means building all of the charging infrastructure we will need to make this happen. It also means increased mass transit alternatives to get fewer miles driven overall
• It makes sense to fund these efforts on fees on retail delivery and transportation network services like Uber because these are the sources of some of the worst emissions. Retail delivery is exploding in use (and expected to continue to do so, pandemic or no pandemic). These are vehicles that literally drive around all day in some of the worst emitting vehicles on the road. Transportation networks result in lots of wasted miles driven

In Further Detail: At its core part of this bill is a solution for a crisis that is decades in the making. We simply do not have enough money every year to pay for our transportation needs. Everyone agrees this is true because it is blindly obvious. The core of this problem is that the major source of revenue for the state is the gas tax and the gas tax has not been raised since 1991. Think about that, in 30 years we have not touched the major way we bring in money to fund transportation projects in the state. Our tax is $0.06 below the national average (and remember: it’s only $0.22 to begin with so that’s a lot) Only 12 states in the country have lower gas taxes than we do, and we are one of the fastest growing states in the entire country. As a result, the state could spend $126 per person in 1991 on transportation. That number has cratered to $69 per person in 2015 and with nothing done, by 2040 the estimate is $41 a person. Sure the state has found some workarounds. Those toll roads everyone loves on the new highway construction? The only way the state could afford to build those projects. We’ve dithered around with bonds and lease-purchase agreements but at its core, we must find a way to simply increase the annual money that automatically goes to the state to take care of our transportation. Anything else is just another band-aid that won’t help in the long-term. Right now the state has a $5 billion 10-year project list that is only partially funded. So yes, we have some stimulus money we can spend (and we’re spending it! Where do you think the massive 2021 transfers came from?), but if we don’t change the fundamental structure, we’ll be right back in the same place in two years. So how to change that structure? Well, first and most obviously: raise the gas tax. Now, TABOR doesn’t allow us to do that without asking the voters, so that is why the bill does this via a fee instead (which are not subject to TABOR). Second, we need to account for the increase in electric vehicles that don’t use gas and of course don’t pay the tax or fee. This is actually a key goal, we want more electric vehicles, but we have to find a way to keep the revenue stream constant. Thus the new registration fees on these vehicles. Is this an ideal solution? No, something based on actual miles traveled, like the gas tax is, would be a better and more equitable way to do this but there is clear public hesitancy over such a step and as such, we should study it first more deeply (which is what the bill requires). The third fundamental structural change that is necessary involves TABOR. Quite simply, it is cutting off our nose to spite our face if we raise all of this extra revenue to pay for our desperately needed transportation issues and then turn around and give it right back. The 2017 law that this bill repeals is not a constitutional, voter-approved, change to TABOR. It actually artificially lowered the TABOR revenue cap below what voters had approved, because that was what was required to get Republicans on-board and Democrats didn’t want to play chicken with a critical hospital fee. So does this bill undo that compromise? Yes, but it wasn’t a reasonable compromise to begin with and the voters did not weigh in on it. By raising the cap back to where it should be, we can absorb this extra revenue without having to pay it right back (and note that there is another transfer built into the bill that moves at least $115 million of this excess revenue right into transportation). It’s important to also point out that we don’t have hundreds of millions of dollars lying around in the state budget waiting to be used on transportation, like Arguments Against suggests we should. We still have massive school funding issues. Do you want to cut health care for Coloradans? Cut prisons? Now you’ve run out of major budget items where you are going to find any large amounts of money. Let’s also keep this to real numbers and not hysterics. We are talking about $0.08 more per gallon of gas and nearly $100 additional registration fees per year for an electric car. Finally, regional transportation districts allow areas of the state to decide for themselves if they want to increase taxes so as to fund more transportation in their area. If, for instance, the Denver metro area wants to increase sales taxes to fund transportation projects in the Denver metro area, they should be able to do so without being vetoed by citizens who don’t live there. The bill also prevents the state from turning around and giving these areas less funding. If citizens in Denver, to use the same example, are paying more in sales tax to fund their transportation needs and then the state pulls funding so that Denver ends up about the same but some other part of the state gets more money, that is not fair to Denver and advantages the people who refused to pay out of their own pockets.

All of that is basically one half of this bill. The other half has to do with our climate goals. Transportation is poised to become the #1 source of emissions in the state soon, passing up energy generation as the emissions in that sector rapidly diminish. If we are going to reach our goals for greenhouse gas emissions in the state, we will have to dramatically reduce the emissions coming from transportation. This will only occur through wide-spread and rapid adoption of electric vehicles and more multimodal transport use. So that’s what we are doing, through all of the new enterprises created by this bill. We are putting hundreds of millions of dollars toward building every piece of this: building the charging infrastructure needed, replacing fleets of vehicles, electrifying public transportation, and yes, incentivizing people to switch to electric vehicles for their personal cars, especially older models. A 2009 study found that 10% of passenger vehicles were responsible for more than 30% of nitrogen oxide emissions and nearly 50% of hydrocarbon emissions. All of this is funded on the back of new fees on retail delivery and transportation network services. The reasons behind this are actually pretty simple. First, retail delivery is rapidly increasing and probably will not drop much when the pandemic is completely behind us. The World Economic Forum estimates that by 2030 there will be over 30% more delivery vehicles on roads to deliver 78% more packages. The motor vehicles that make these deliveries (think FedEx or Amazon) are some of the highest polluting vehicles on the road and frequently are idling in neighborhoods. Throw in all of your GrubHubs and UberEats and every other delivery service that uses regular commercial cars and you’ve got massive amounts of road usage and emissions. For the Ubers and Lyfts of the world, the Union of Concerned Scientists estimated that arrange a ride (by yourself, so no pool service) causes 69% more greenhouse gas pollution than alternative forms of transportation in part because of all the so-called deadhead miles (miles driven by the driver to get to your location and then from where they drop you off to the next location). Rather than try to stop either of these services, which have become essential, it makes more sense to use them to fund our electrification efforts (and focus hard on electrifying these services, as the bill does). And again, to be clear on this: $0.27 per delivery and $0.30 per ride in a non-electric car. Just like the gas fees, it is most likely that most people will not even notice. And why are we doing all of this, why spend so much money pushing people toward electrification? To avert climate catastrophe. We keep piling up record highs and collecting top 5 record warmest years. We have seen increased flooding in coastal areas and more dangerous storms (how many 100 year weather events can we have in the space of a few years?) More and more extreme fires hit our state seemingly every year. Droughts last longer and are more intense. Our current climate situation is bad here in Colorado, we cannot afford for it to get much worse. So drastic and immediate action is required. Not to mention, the smog that results from all of this pollution is really bad for your health. Clean air will do more than help us save the climate (and ourselves), it will also help us improve the health of all Coloradans, particularly those who live in close proximity to highways.

So yes, the bill does a lot, with a lot of different moving pieces. But at its core it is about two things: adequately funding our transportation needs into the future and reaching our emissions reductions goals to avert climate catastrophe and improve our health.

Arguments Against:

Bottom Line:

• This is a clear attack on the principles of TABOR—using fees to evade the requirement that voters approve new taxes (even though these are taxes in all but name), reneging on the 2017 deal to lower the TABOR cap (the other half of the deal remains in place), and constructing multiple enterprises to evade the new requirement that enterprises which bring in more than $100 million in their first five years be approved by voters
• Voters have been clear: they want this problem solved using existing revenue. They rejected a 2018 sales tax increase to fund transportation and by a pretty clear margin
• The bill also removes the ability for voters to weigh in on using bonds to basically cover this same ten-year transportation funding need on this year’s ballot. We could have used that while continuing to work to find a way to use existing resources to solve our funding needs by cutting in a bunch of different other areas
• And all of this new revenue (and stimulus money) isn’t even all going to our roads, a lot of it is going to multimodal mass transit projects
• Much of this bill isn’t even about our existing transportation needs, instead it is about forced electrification of our transportation system by spending hundreds of millions of dollars to push people into electric vehicles and build infrastructure
• All of this will come at the expense of the oil and gas industry, which is a critical state industry that employs a lot of Coloradans
• All funded by increased fees on Coloradans who want something delivered to them or want to use Uber or Lyft
• Regional transportation authorities have the potential to create real inequity in the state, where parts boost their own transportation funding and then are unwilling to help the rest of the state, which cannot do it on their own, boost theirs

In Further Detail: You can dress it up however you’d like but this bill is a clear attack on TABOR’s basic principles. First, reneging on the 2017 deal to raise the cap. Because this isn’t some sort of reversal, the part the Republicans gave on, moving the hospital fee out from under TABOR is still in effect. The Democrats are simply backing away from their part of the deal. Second, all of these fees, fees everywhere you look, without asking for voter approval. Is that technically legal? Sure, but the voters have been pretty clear about this. They rejected a 2018 proposal to raise the sales tax in order to fund transportation. They do not want increased taxes (or fees) to cover our transportation needs. So an additional $3.8 billion over ten years? Yeah, we need to be asking the voters not imposing all of these new fees. And then you have all of these new enterprises. You might be asking yourself, why create this many different enterprises instead of just one or two? Well the answer is evade the voters yet again, this time the ballot proposal from just last year that said any new enterprise that brought in over $100 million in its first five years needed voter approval. Cumulatively these enterprises would violate that provision; separately they do not. We were poised to ask voters to basically fill the exact same 10 year transportation hole this bill fills through bonds, which of course get repaid over time (with interest). This bill of course repeals that, but it is possible we would have found that 10 year solution right there. Then we could have continued to work on our overall budget to find the $20 million here and $50 million there that we really don’t need to be spending at the state level. Will that be easy? No, in an ideal word we’d spend unlimited money on everything but that isn’t the world that exists and tough choices have to be made. On the stimulus money, let’s also be clear that vast amounts of this are going to multimodal transport and not simply to the state highway users fund.

That brings us to the fact, and it is a fact, that about half of this bill has nothing at all to do with funding our current transportation needs and is instead about forcing the state into electrifying transportation. This isn’t so much putting a thumb on the scale as it is stomping on the scale and breaking it. The oil and gas industry is a critical industry in this state. We are 7th in oil production in the US. Tens of thousands of people are employed by the industry and hundreds of thousands of jobs depend on it. The clear goal of this bill is to in effect destroy this industry in order to raise up clean energy. Hundreds of millions of dollars spent on pushing electrification instead of our roads, bridges, and tunnels. Hundreds of millions of dollars pushed into multimodal transportation that may not even by wanted (how many times do we have to see actual demand fall short of projected demand for these projects before we learn our lesson?) All of this funded through increased fees on all Coloradans who want to get something delivered to them or who want to use Uber or similar such services. Note by the way that taxis don’t pay this fee, which is not fair. To be clear, no company is going to pay these fees. They are passed on to the end user, like sales tax, and all Coloradans will pay.

As for regional transportation authorities, some things just need statewide solutions and our transportation network is one of them. If parts of the state boost their transportation revenue, then those parts are less likely to support statewide initiatives to do the same. That could leave parts of the state out entirely, where the infrastructure there deteriorates while other parts thrive. Future efforts to boost revenue could be torpedoed by the regions of the state who have already boosted their own revenues. Smaller and less prosperous parts could be left in a no-win situation where they cannot raise enough funds on their own to address transportation and cannot convince the rest of the state to help them. The structure of the bill leaves the department of transportation unable to siphon off at least some funds from the thriving areas to help other parts of the state. We all have to be in this together.

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Bottom Line:

• These sorts of fees are highly regressive, in that they hit poor people the hardest. Arguments For is probably right that many Coloradans won’t even notice the increases but poor Coloradans probably will. Our tax system is already regressive, we need to instead be focusing on unlocking the ability for the rich to pay their fair share which includes closing tax loopholes, removing deductions, and looking to end the TABOR enforced system of no progressive income taxes