Asphalt resurfacing project on US 24-285 near Johnson Village.

Colorado’s gas tax collections in the last fiscal year dropped 6½ percent to the lowest level since 2001, bringing fresh urgency to transportation planners’ quest for a reliable, stable and predictable method of funding projects.

The state’s primary source of money to pay for transportation projects has lately been an erratic roller coaster, ending up in 2009 just slightly above where it was in 2001 for little gain during the decade. Yet over the same time period, the Colorado Construction Cost Index, measuring how much it costs to build roads, bridges and other transportation infrastructure, nearly doubled.

“This is not surprising,” Heather Copp, chief financial officer of the Colorado Department of Transportation, after looking at a spreadsheet showing all revenue sources, including the fuel tax, going into the state Highway Users Tax Fund from 1992 through 2009.

“We have continually been adjusting our forecasts down,” Copp said. “This is one of the reasons that the federal trust fund is in trouble. The only bright spot is our gas tax revenue isn’t down percentagewise as much as the federal trust fund.”

The cost of transportation construction went up 95 percent just from 2001 to this year, according to tabulations of all bids received by CDOT over that time.

Doing the math, that means the buying power of the gas tax dollar in 2001 has declined to 52.6 cents today. CDOT, in addition to counties and cities that get transportation money from the state HUTF, are faced with having to use shrinking dollars to keep up with growing demand.

The spreadsheet was compiled by the state treasurer’s office at the request of Inside Lane, and you can download it here. It shows a two-year decline in revenue from vehicle registration fees, the second largest source of HUTF deposits, and a decade-long downward trend in driver’s license fees, the third-largest contributor to road and transportation projects from the HUTF.

The fuel tax for the fiscal year that ended June 30 was $539.9 million, compared with $577.4 million in 2008. Vehicle registration fees dropped to $180.9 million, down 2.4 percent from the year before. Driver’s license fees were $13 million, after a steady downward trend over the decade from $24.7 million in 2000.

“You just said the key words, predictable and sustainable,” said Doug Aden of Grand Junction, a member of the Colorado Transportation Commission and a co-chair of Gov. Bill Ritter’s Transportation Finance and Infrastructure Panel.

Doug Aden

“The problem with the fuel tax is that it’s never been indexed to inflation and so we end up with this situation now where the numbers are pretty clear,” Aden said. “The revenue that the fuel tax can generate has probably peaked and has started to decline because the fleet of vehicles out there in general is much more fuel efficient than it used to be – and that’s a good thing, no one argues with that – but therein lies the dilemma.”

The fuel excise tax is a charge per gallon. That means it doesn’t go up as gas prices and construction inflation go up. Colorado’s fuel tax is 22 cents per gallon for gasoline and 20.5 cents for diesel fuel.

“We got the double whammy – inflation and stagnant revenues,” Aden said.

“We have to find something that is more predictable and sustainable. I think the FASTER legislation is a step in that direction because it’s tied to the number of registered vehicles. Hopefully over time that will become predictable.”

The governor’s panel wrapped up work last year by issuing a report citing a need for up to $1.5 billion in new annual transportation spending at the state, county and city levels to keep up with current maintenance and growth needs.

While the panel outlined a potential mix of fees and taxes to reach that amount, the only movement on it so far – last spring’s adoption of the FASTER vehicle registration fee hikes dedicated to bridge and road repair funds – is projected to raise one-sixth of that amount and only half of what the panel identified as urgent “fix it now” deferred maintenance items.

Even at that, FASTER has drawn vocal opposition and a citizen initiative not only to repeal the hike, but to roll back all auto registration fees to a maximum of $10 a year.

You can read CDOT’s 2009-10 budget here.

Transportation is an area in which the needed revenue can, with some effort, be apportioned over the users and beneficiaries through targeted user-pay methods such as the gas tax, vehicle registration fees, tolls, mileage taxes or other mechanisms that equitably represent the proportionate share of the burden of providing the state’s transportation network.

But the gas tax was last increased in 1992, the year voters approved the TABOR amendment that limits state spending and taxing authority. Raising the gas tax since then requires approval by statewide voters, and politicians have lacked the will to place such a measure before the electorate.

Instead, lawmakers variously have sought subsidies for transportation projects from the state’s general fund. That hasn’t provided the stability and predictability planners say they need to adequately plan year to year.

Senate Bill 1 passed in 1997 provided for 10 percent of the state’s annual sales tax receipts to be diverted from the general fund once certain budgetary thresholds were. The money that flowed over to CDOT was supposed to be based on the assumed amount of sales taxes derived from sales of automobile and auto parts. The money was to pay for work on 28 strategic transportation corridors around the state – the highest profile one completed was the T-REX widening of Interstates 25 and 225 in Denver, Arapahoe and Douglas counties.

But the volatility of the general fund through two recessions has resulted in a feast-or-famine cycle for CDOT budget planners. Some years, SB 1 produced more than $200 million for the HUTF and the 28 strategic corridors. These are sometimes referred to as the “7th Pot” projects, because their funding “pot” is separate from the other HUTF money that gets apportioned to projects in CDOT’s six regional offices around the state.

Aden said depending on general fund transfers isn’t predictable, nor good policy since other state services rely on the general fund.

“That, as you well know, is the great political debate. I tend to think, philosophically, that the political reality we’re in is that it’s going to have to be a more user-pay system. Look at the struggle we have with the general fund in Colorado. You have prisons, Medicaid, K-12 education all drawing from it.

“Together those three area today account for 76 percent of the state general fund, and within five years with no change, they will take 91 percent.

“Realistically transportation is going to have to start looking at user-pay, and that’s maybe an increase to the gas tax, or transition to VMT or ultimately tolling.”

Here are the annual percentage increases or decreases in state fuel tax collections since 1992:

92-93: +4.3%
93-94: +7.8 %
94-95: +2.0%
95-96: +5.7%
96-97: +2.1%
97-98: +4.5%
98-99: +5.2%
99-00: +5.0%
00-01: +1.1%
01-02: +3.5%
02-03: -0.5%
03-04: +2.7%
04-05: -0.5%
05-06: +2.0%
06-07: -2.4%
07-08: +4.8%
08-09: -6.5%

165.3: The four-quarter average Colorado Construction Cost Index for FY 2001
322.2: The four-quarter average Colorado Construction Cost Index for FY 2009
(Base year 1987=100.0)