Reps. Joe Rice and Frank McNulty were all smiles before going after each other on the FASTER bill at the Colorado Contractors Association 2010 Legislative Kickoff panel on Thursday. CCA photo by Terry Kish.

Telling a group of transportation contractors that you’d vote the repeal the FASTER auto registration fees that are earmarked to replace unsafe bridges and make highway safety repairs might seem overly frank.

Make that Overly Frank.

Rep. Frank McNulty, R-Highlands Ranch, told attendees at the Colorado Contractors Association’s 2010 Legislative Session Kickoff conference that while he won’t introduce such a bill, he would vote for one if it came up.

That’s like going to Vail and declaring you’d vote to shut down the lifts during Christmas week. The CCA was one of many groups pushing hard to pass FASTER last spring and is pledged to defend it in the upcoming session against expected efforts to repeal it.

But McNulty said he believes new transportation funding should come from Colorado’s general fund – to which sales and income taxes are the major sources. The FASTER charges are what’s called “user fees,” like the gas tax, paid by those who use highways and bridges.

“I don’t think that was the right thing to do,” McNulty told the gathering of about three dozen people at the Doubletree Hotel in Centennial. He credited all sides with wanting to help transportation but said the conflict is over how to do it.

“There is a sincere effort by Republicans, Democrats and the governor’s office to add to transportation funding,” McNulty said. “The question has always been how do we do it and what is the appropriate way to do it.”

But McNulty’s colleague from the other side of the aisle, Rep. Joe Rice, D-Littleton – the House sponsor of FASTER in the last session – counterpunched by embracing FASTER as “the first new money for transportation in 18 years.” He challenged McNulty not to vote against it unless he can come up with another source for the $250 million a year FASTER is expected to provide.

Even at $250 million a year, an amount not reached until FASTER’s third year, it is only half of the estimated $500 million annually in new funding a panel that spent two years studying state transportation funding said was needed just to catch up on deferred maintenance. Another billion dollars a year was needed on top of current funding to start in on a list of shelved projects for congestion relief, safety, transit and other areas statewide.

“We need to hold on to FASTER funding,” Carla Perez, Gov. Bill Ritter’s senior transportation policy advisor, told the audience.

CCA's panel included, seated from left, Carla Perez, Gov. Bill Ritter's senior transportation policy advisor, Rep. Joe Rice, D-Littleton, and Rep. Frank McNulty, R-Highlands Ranch. CCA Executive Director Tony Milo is standing at the podium. CCA photo by Terry Kish.

McNulty and Rice – a colonel in the Army Reserve who arrived back in Denver Thursday after a tour of duty in Iraq – say they’re friends, representing neighboring districts, and agree on many things.

Clearly this was not one of those areas. They went back and forth challenging the other to work together, but wanting the other to budge first.

“I do think we can expect this legislative session will have a bit of rancor to it,” McNulty said, noting it will be an election year with Ritter to face now-likely GOP candidate Scott McInnis, and Republicans within a four-seat striking distance of taking back the state Senate.

Translation: Expect a lot of posturing with sacrificial-lamb bills that stand no chance of passing but provide political ammo by putting lawmakers on record by their votes on them.

Rice urged the contractors to get involved in saving FASTER.

“FASTER wouldn’t have happened without your involvement coming down to the Capitol,” Rice said. “There is nothing like having a real person showing up at the Capitol. We’re going to need your efforts as much this session as last year.”

Rice then turned to his friend McNulty and asked him what programs and services he would cut from the general fund in order to subsidize highway users.

McNulty refused the bait, saying instead of taking the current budget and paring it down with the programs they don’t want, lawmakers should be forced to start from zero and build the budget only with the programs they do want.

Joe O’Dea, president of the CCA, pressed McNulty further.

“What would you specifically cut?” he asked.

Again McNulty demurred.

“I don’t want to have a conversation about what we cut, I want to have a conversation about what we fund,” he said. “If we did zero-base budgeting, we would find out what we really have.”

Rice came back with the point that both approaches require the elimination of programs to come up with extra money, and McNulty should identify what he thinks should go.

“Either way, you end up with a bunch of stuff you’re not going to fund,” Rice said. “I would love to be proven wrong and find all this magic money for transportation.”

Replied McNulty: “It’s not magic money, it’s things that won’t be done.”

To which Rice replied: “And I’m saying don’t repeal FASTER until you find another source of suitable revenue to replace it.”

Two “friendly” bills are expected to come up to amend FASTER. One would reduce late fees on non-motorized vehicles such as horse and boat trailers. The fee hikes were accompanied by increased late fees ranging between $25 and $100 depending on the length of the delay, and took away county clerks’ discretion to waive them. Folks who broke out their trailers in the summer and fall and went to get new tags were stunned to be hit with a $100 fee on top of the registration cost for trailers they only used sparingly.

One proposed bill would cut the fee in half only on non-motorized vehicles – coming in late is, after all, still late. A second bill would allow clerks some leeway to waive the late fees. The state didn’t expect the late-fee windfall and the loss of some of the fees wouldn’t dent FASTER’s predicted revenues.

But opponents of FASTER are expected to attempt an outright repeal, and a citizen initiative is on its way to the ballot that would not only repeal it, but cut registration fees down to a maximum of $10 – further slashing transportation funding, as those fees go into the Highway Users Tax Fund.

User fees had been the traditional method for building transportation facilities nationwide as well as in Colorado, until 1992 when the TABOR bill passed and required statewide votes to raise taxes. Since then, there has been no increase in the state gas tax, which stands at 22 cents (20.5 cents for diesel). Colorado gas tax is below the national average of 28.9 cents among all the states.

Inside Lane reported last month that for fiscal year 2009, which ended June 30, Colorado collected just slightly more in gas taxes than it did in 2001, putting state transportation infrastructure funding back where it was at the beginning of the decade while costs have risen substantially. In fact, in 2009 Colorado gas tax collections declined 6.5 percent from 2008.

Amid reluctance to ask voters to approve higher taxes at the pump, legislators have made several forays into subsidizing transportation from the general fund. That’s the part of the state budget that funds things such as K-12 education, higher ed, health care, human services, prisons, courts and other general government functions.

In 1997, lawmakers passed Senate Bill 1, which diverted up to a set limit of money after all other general fund limits had been reached – the six-percent growth cap and a four-percent reserve fund. In 2002, they passed House Bill 1310, which allowed a further diversion to transportation in years when the SB 1 limit had been reached.

But in poor economic years, those thresholds were not hit. Because the subsidies could only take the very last dollars to flow in, they were the first things to disappear in bad years – 2003 through 2005, and again last year and projected to remain at zero until 2012.

It meant wild fluctuations in CDOT budgets from year to year, and this unstable and unpredictable “feast or famine” cycle brought difficulty to the annual transportation planning process.

The legislature this year got rid of SB 1 and HB 1310 when it passed Senate Bill 228. That replaced an 18-year-old growth cap on the general fund. CCA was successful in gaining an amendment stipulating that starting in 2013, two percent of general fund revenue will be diverted to transportation for a five-year period – but only if personal income growth in Colorado the year before is at least five percent. If it isn’t, the five years of diversions wait until a year when income growth does hit five percent. After it’s triggered, the subsidy continues for five years, at two percent, no matter what happens to the general fund budget in years two through five.

CCA said the five-percent personal income growth target has been reached in Colorado four out of every five years, historically. It then estimated that SB 228 would result in slightly more money for transportation over five years than SB 1 and HB 1310 combined were projected to yield. Because of the recession, state budget analysts projected there would be no SB 1 or HB 1310 transfers at all for the next three years anyway.