Political consultant Rick Reiter, speaking at the Colorado Contractors Association's 77th annual convention on Friday, outlines the impacts of three measures on the fall Colorado ballot that would severely impact transportation funding.

By Kevin Flynn
Inside-Lane.com

Three “scorched earth initiatives” on the Colorado ballot this fall would “bring Colorado state and local government construction activity to a halt,” political strategist Rick Reiter cautioned several hundred transportation contractors and associates.

At the Intra-Industry luncheon during the Colorado Contractors Association’s 77th annual convention, Reiter said Proposition 101, Amendment 60 and Amendment 61 are responses to legislative and judicial moves over the last year that raised the tax and fee burden on Colorado families for transportation, schools and general government.

“These initiatives are meant to undo that,” said Reiter, whose firm will be leading the opposition campaign to the three ballot issues.

Republican and Democratic leaders in the legislature, as well as both major candidates for governor, Republican Scott McInnis and Democrat John Hickenlooper, have come out in opposition to the measures.

The initiatives would impose a draconian regimen on government at all levels in Colorado by severely restricting or eliminating borrowing, and by slashing taxes without regard for the actual cost of public services.

For instance, Prop 101 arbitrarily sets the license fee for all vehicle registrations at $10. Currently, license fees vary according to your vehicle type and weight – a user fee to pay for road maintenance. Last year, the legislature passed on higher user fees for repairing substandard roads and bridges that are in poor condition. The program, called FASTER, would be eliminated by Prop 101. It would substantially cut into state-level funding for fixing roads and bridges.

An Inside Lane analysis in December found that if Prop 101 had been in effect in the 2009 state fiscal year, it would have lopped off 17 percent of the entire Highway Users Tax Fund, the earmarked resource from which the Colorado Department of Transportation, the state’s 64 counties and its municipalities draw most of their money to maintain the state’s streets and bridges.

In fiscal year 2009, Colorado collected $180.9 million in vehicle registration and license fees, a drop from $185.3 million in 2008. It was the lowest amount in four years. Prop 101 would have erased $134,4 million of that, the analysis showed.

Prop 101 backers haven’t explained how they arrived at the $10 figure, other than to say that it’s more than enough to cover the cost of the county issuing a license plate and filing the paperwork. You can read their reasoning here.

But that’s not the only purpose of a license fee, which collects additional money for heavier vehicles, which cause more damage to roadways and bridges. Together with the gas tax, the license fee forms the backbone of highway maintenance funding.

A car’s license fee is distinct from the “ownership tax,” often more expense. That is an annual property tax on the vehicle and is dividing among school districts, municipalities, counties and the like. Prop 101 cuts that ownership tax to $2 on new cars and $1 on older ones.

Amendment 60 cuts property taxes in half by 2020 for the state’s 177 school districts, Reiter said. He called it a response to last year’s judicial ruling upholding the legislature’s freezing of mill levy rates, which effectively raises annual property taxes as values rise.

While the amendment says the state will make up the local funding shortfall, Reiter noted that with Colorado gutting its general fund budget to balance it in the recession, “that piece isn’t going to happen.”

“How schools manage with that isn’t clear,” Reiter said.

It also requires governments to pay property taxes on their property, and to reduce mill levy rates to offset that revenue.

Amendment 61 restricts borrowing by eliminating it at the state level and allowing only general obligation bonds of 10 years duration or less. By eliminating long-term bonds for large projects, Reiter said, and forcing them into 10-year issues, it would raise the annual repayment cost to exorbitant levels that likely would not be approved by voters – like trying to buy a house on a 10-year mortgage instead of a 30-year one.

It also requires that once existing debt is paid off, the taxes that had been paying that debt must be lowered a commensurate amount.

That leads to the bizarre situation in which the state gas tax would have to be cut when the transportation bonds sold to finance the T-REX project and other major CDOT construction of a decade ago are paid off, since existing gas tax revenue was pledged to pay that debt, Reiter said.

“You have some tough work ahead,” Reiter told the audience of several hundred transportation stakeholders, urging them to work against the measures.