[bouldercouncilhotline] Hotline: Update on statewide transportation financing discussions

[cmosupport at bouldercolorado.gov]

Sender: Appelbaum, Matt

Colleagues – As you know, there are continuing discussions regarding a potential ballot issue for statewide transportation funding.  I’ve been attending many of these as a member of MPACT64 (taskforce including Metro Mayors Caucus and the
 three main, non-metro county organizations), and whenever possible I’ve also attended other relevant Metro Mayors and other committee meetings.
 
While there is no agreement yet about revenue sources, projects, funding allocations, etc., there is a working (or straw-man) proposal.  I’ve attached a recent memo that summarizes some of the MPACT64 work and provides a brief overview
 of the working proposal.
 
Although I’ve taken part in as many of the conversations as I can, neither I nor others have agreed to support a final proposal.  This issue will be presented to Metro Mayors in early June, and each city will need to get direction from
 their council.  While we won’t need to make a final decision in the next few months, we will be expected to indicate if we can support the working proposal – or at least a fairly close approximation of it – so that the many groups in the coalition can decide
 if they should go ahead with another round of more detailed polling leading to a final form of a ballot issue.
 
I won’t repeat the key points in the attached memo – please be sure to read the section headed “A Sales Tax for Transportation” that describes the working proposal – but I would like to offer a number of thoughts and concerns:
 

·        
Although begun as a working group of Metro Mayors and the three county organizations, we have been inviting many other interested groups to the discussions, including the metro counties, business groups, environmental groups,
 etc., and have also had and will continue to have meetings with CML since their position on this will be critical.

·        
Obviously a sales tax increase of .7% is huge and will almost certainly affect our ability to raise the sales tax for other purposes.  This is not surprisingly a big concern at Metro Mayors and CML, although for now all of the
 engaged groups have agreed to keep this in consideration given the polling results and the apparent lack of alternative revenue sources.  From the attached charts, you’ll see that .7% is necessary if CDOT is to obtain its minimum of $250M/year, and if the
 revenue is split as shown between CDOT, local governments, and transit.

·        
There have been some recent discussions about creating a “hybrid” model where revenues come not just from the sales tax but from other sources in order to reduce the sales tax increase (at least one group has stated they cannot
 support a sales tax increase greater than .5%).  This might include an increase in the tax on diesel fuel (so that truckers would contribute to this new funding).  I’ve raised the truck issue more generally, since it is widely accepted that heavy trucks cause
 the large majority of road damage and also a substantial amount of congestion/safety issues, and don’t come close to paying their fair share; I doubt much will be done in this regard, although at minimum a diesel fuel tax seems fairly likely (unfortunately,
 it doesn’t raise very much money).

·        
The CDOT/local/transit split has generally been accepted but certainly could be modified.  Once the decision was made to use sales taxes instead of fuel taxes, there was agreement that this ballot issue would need to fund “everything,”
 since voters would not approve additional measures.  Previously there had been discussions about subsequent regional ballot issues (including one for the metro area that would also “finish” FasTracks).  But that has been incorporated into this single issue,
 and thus it seems likely that the CDOT/local split will remain intact.  As for transit, it polls well throughout the state and for now there has been essentially no pushback over the 33% transit share, although that might happen in order to reduce that tax
 rate.

·        
However, within the local share there is some disagreement as to how it should be allocated.  Originally the concept was that the current HUTF model would simply be used.  That gives counties 55% of the local share and cities
 45%.  More importantly, the HUTF formula rewards localities for having more cars and more lane-miles, something that we have long felt was inappropriate.  Given that this new tax is a sales tax, not a fuel tax, it seemed even more essential to fix the allocation
 formula.  With that in mind, I early on made it clear that the local share should be based, at minimum, on population (even better would be basing it on where the sales tax revenue came from, but we won’t get that).  Metro Mayors seems to agree with this concept,
 but CML may well not as it doesn’t, perhaps, work so well in rural areas.  For now, there is tentative agreement to a split approach, where all/some cities would use population, and counties and perhaps rural cities would use the HUTF formula.  I’d add that
 I’ve also brought up the even more controversial concept of changing the 55%/45% county/city split, since clearly the vast majority of sales taxes comes from the cities; don’t hold your breath on that changing, however.

·        
Assuming the current working proposal, and assuming that the allocation to cities would be based on population, Boulder would receive about $2M/year in new transportation funding.  While we obviously shouldn’t start counting on
 this, I’d note that we should, at least, factor this in as we consider local ballot issues for 2013 that would fund transportation.  I’ll simply suggest that while we might earmark such revenue, we might want to be able to un-earmark it if it is replaced with
 an equal or greater amount of earmarked money from another source.  It’s not that transportation couldn’t effectively use additional funding, but that increments above our intended amounts might better go to other, equally underfunded city programs.

·        
On to transit.  The assumption is that CDOT will use some of this for intercity bus service, and some will go to rural areas, but the bulk will go to existing transit agencies, with RTD getting about 60% of the total (which is
 the metro area’s sales tax contribution).  I think it is safe to say that Metro Mayors, while supporting this concept, would insist on clear spending guidelines and not let RTD decide how the revenue would be spent.

·        
The RTD transit funding must of course include a large set-aside for the NW Corridor – but just how large is the key issue.  In order to make the corridor “whole” from FasTracks, we’d pretty much need to get all – yes, all – of
 the new revenue (assuming as usual the current working proposal).  It won’t surprise anyone that others in the metro area might not agree to that, regardless of the equity issues.  But without a guarantee of a very large chuck of the revenue, it is clear that
 the NW Corridor will, without doubt, get very little of it.  This is further complicated by the need to detail how the money would be spent – which awaits the results of the NAMS (Northwest Area Mobility Study) effort, which won’t be completed until next year,
 and which then must somehow yield consensus in the corridor, which may well be difficult.

·        
These metro area transportation discussions will continue within a group originally formed by Metro Mayors to discuss a possible regional transportation tax.  This group (MTD: Metro Transit District) is now focusing on how the
 metro share of the statewide tax would be spent, with an obvious emphasis on the transit allocation.  I’ve been attending these meetings and will continue to do so since the transit component is so critical to us.

·        
As noted in the attachment, CDOT is working on a list of projects that would be funded with its portion of the new revenue.  CDOT already has a long list of potential projects, but will be working with the various regions over
 the next couple of months and will produce a prioritized list.  It will be essential that these projects meet the guidelines/principles that MPACT64 has generally agreed to, most notably not funding new capacity unless it is tolled/managed.  These projects
 must also somehow mesh with the projects that may be funded by RAMP over the next five years.  Clearly the projects will need to have appeal statewide, but from my perspective must also not provide much, if any, funding for capacity.

·        
There has also been some discussion as to when this new tax would sunset, with a general agreement that 15 years seems reasonable in order to raise sufficient funds, to allow bonding (although CDOT has stated they don’t plan on
 bonding anyway), and because by the end of that time period it seems fairly certain that new ways of funding transportation (such as a VMT tax) will be implemented.  One interesting twist – which has been used elsewhere – is to make a portion of this revenue
 permanent so it could fund ongoing operations, particularly transit.
 
 
Again, we and all the other local governments will be asked to weigh in on this proposal over the summer.  Please let me know if you have comments, concerns, suggestions, etc.  There is still time to modify the working proposal, although
 we may not find consensus on some of our requests.  It is far too early to tell if the many groups involved in this effort will, in the end, agree to move forward with a specific ballot issue, what it’s exact form will be and, of course, whether the voters
 in 2014 would pass it regardless.
 
--Matt
 
 
 
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