Colorado’s state-imposed rental car fee would increase by as much as $3 per day under a soon-to-be-introduced bill in the legislature aimed at attracting federal investment in proposed Front Range and mountain passenger train systems.
The fee increase would generate an estimated $50 million in revenue annually, money that would be used as a match to secure federal grants. Lawmakers are specifically hoping for a share of the $66 billion Congress set aside in 2021 for rail development in the Infrastructure Investment and Jobs Act.
“We have a short window to pull down this federal infrastructure money,” said Senate President Steve Fenberg, a Boulder Democrat and the lead sponsor of the forthcoming bill. “I really want to make sure Colorado gets some of that money. I don’t want it all to go to the Northeast. I don’t want it all to go to California. I want to make sure that Colorado gets its fair share.”
The Infrastructure Investment and Jobs Act grant money must be applied for in the next few years and the state match must be at least 20% of the grant amount.
“The more you match, the more competitive you are,” Fenberg said, acknowledging that the state doesn’t know yet exactly how much money it will cost to build Front Range and mountain passenger rail lines.
Building a Front Range rail system, with trains running from Pueblo to Fort Collins, is estimated
to cost billions. Expanding the limited, seasonal passenger rail that currently runs from Denver to Winter Park further northwest to Steamboat and Craig is expected to be less costly because there’s existing passenger-grade tracks and platforms along that route.
Colorado already imposes a $2.13 daily fee on renting a car. The measure would increase the fee to $4.13 for electric vehicles and $5.13 for gas-powered ones starting in January 2025.
If the bill passes, the revenue generated by the increased fee would represent the first dedicated funding source for Front Range and mountain passenger rail. The money would be collected through the High Performance Transportation Enterprise, which is housed in the Colorado Department of Transportation and is effectively the agency’s financing arm.
The enterprise would be directed by the bill to focus the money generated by the increased rental car fee on Front Range passenger rail, mountain rail or state-run bus routes with an emphasis on securing federal grant dollars. In the future, the fee revenue could be used for other transit projects.
The prospect of a new fee is sure to meet stiff opposition from the Republican minority at the Colorado Capitol, which has accused Democrats in recent years of imposing fees to get around the requirement in the Taxpayer’s Bill of Rights that voters approve all new tax increases.
In 2021, for example, Democrats in the legislature and Gov. Jared Polis approved new fees on gasoline and diesel fuel purchases, ride-share rides and deliveries to raise billions of dollars for transportation projects. This year, a group of Democrats are planning to introduce a bill that would impose a fee on alcohol producers and wholesalers to raise money for addiction treatment and recovery programs.
Under Colorado law, the legislature can impose fees without voter approval so long as the fee revenue is spent to offset the effects of activity that’s being charged and as long as the fees raise a limited amount of money or are collected by an existing enterprise.
But Democrats have tested the limits of how much they can raise using fees, eliciting legal challenges from conservative groups. None of those challenges has been successful.
“The people of Colorado can’t afford life now. Democrats want to put another fee on top of them for a pie-in-the-sky idea?” Senate Minority Leader Paul Lundeen, a Monument Republican, said in reaction to the fee proposal.
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The reality, however, is that Democrats, who have a supermajority in the House and a near-supermajority in the Senate, don’t need Republicans to pass the funding bill.
Fenberg said increasing the rental car fee to raise money for rail projects makes sense instead of imposing a statewide fee that would double charge people in Boulder County who have already been paying increased sales taxes for rail. Additionally, he said, tourists, who are predominently responsible for renting cars, have a big impact on traffic.
Another benefit of raising the rental car fee: putting the financial burden on the troves of tourists from Texas — and other states — is more politically palatable at the Capitol than raising fees on Coloradans.
“A lot of people come into Colorado, they rent a car and they’re part of the congestion on our roads, especially to tourist resort areas like the mountains,” Fenberg said. “The fee source in this bill is going to be to offset the impact from additional cars on the road from car rentals.”
The news of Fenberg’s fee plans comes a week after he joined Polis, Amtrak’s president and other state and local elected officials on a test passenger rail ride from Union Station to Longmont. The trip was aimed at building support for the Front Range rail project, which has become a legacy-defining goal for the governor.
“After years of waiting, the pieces are falling into place,” the governor said in his annual State of the State address in January. “It’s not a question of if the United States will see a massive expansion of passenger rail, but it’s simply a question of whether Colorado will seize this opportunity and get our share of those federal dollars to deliver passenger rail to the residents of our state.”
The governor’s office was involved in crafting Fenberg’s bill, which could be introduced before the end of this week.
Fenberg said his measure would also instruct the Regional Transportation District to work with the Front Range Passenger Rail District, a special taxing district that spans the train’s proposed service area, on plans for passenger rail from Denver to Fort Collins.
The idea, he said, is to tap into the money RTD has been raising through sales taxes for years for commuter rail between Denver and Boulder and Longmont and use it to also help draw federal financing in a passenger rail system between Denver and Fort Collins.
The federal infrastructure money can only be directed to passenger rail projects, not commuter rail projects, Fenberg said, which is why the agencies teaming up makes sense. The routes would overlap and thus the federal money could be used to pay for shared tracks and stations.
The difference between passenger and commuter rail has to do with distance and stops — commuter rail typically runs shorter distance and has more stops.
“You can get both projects done with a somewhat similar pot of money,” he said.
Fenberg said the rest of the Front Range passenger rail system, from Denver to Pueblo, would likely have to be paid for through a tax imposed by the Front Range Passenger Rail District, which was created through a bill passed by the legislature in 2021.
The district is allowed to ask voters to approve a sales tax increase of up to 8 cents on a $10 purchase.
“That’s sort of like phase two,” Fenberg said.
The 2024 legislative session ends May 8.