Colorado drivers would begin paying a new fee of 2 cents on every gallon of gas they purchase starting in July 2022 under legislation Democratic state lawmakers are expected to introduce in the coming weeks.
That fee, which would not require voter approval, would increase to 8 cents per gallon starting in July 2028 under the proposal, which is part of a $4 billion, 11-year effort to raise and spend money for badly needed transportation projects across the state.
Lawmakers, political groups and business interests have been trying for years, without much luck, to find a transportation funding solution. The proposal, which includes a number of other new road-usage fees, is backed by Gov. Jared Polis and also aims to reduce traffic congestion on Colorado’s roads, expand public transportation and improve air quality by making it easier for people to own electric vehicles and spending millions on environmental initiatives.
“We think this is the time that we absolutely have to get something done and something meaningful,” said Senate Majority Leader Steve Fenberg, a Boulder Democrat. “Not a baby step, but a real meaningful step toward solving the transportation problems that we have in our state.”
But Republicans are likely to push back intensely against the proposal. Conservative interest groups have already been spending money to build public opposition to the proposal.
The initiative also calls for:
- Spending $1.2 billion in taxpayer dollars on transportation over the next 11 years, including $430 million in state coronavirus stimulus dollars this year and an average of $112 million annually in general fund money from taxpayers after that
- Charging a new, 6-cent-per-gallon fee on each gallon of diesel fuel purchased starting in July 2022 and increasing to 8 cents per gallon in July 2026
- Charging a new, $9-per-year fee on battery-powered electric vehicles starting in July 2022, increasing to $90 by July 2031
- Charging a new, 30-cent-per-trip fee on Uber and Lyft riders starting in 2022 and eventually increasing it based on the federal Consumer Price Index. The fee would be halved for people carpooling in a rideshare, or riding in an electric vehicle.
- Charging a 25-cent fee on delivery services — like Amazon, Grubhub and FedEx — starting in July 2022
The gas fee alone is expected to generate $1.47 billion in the first 10 years after it begins. The delivery fee would generate the second largest amount of money of all the fees at $1.23 billion over its first 10 years.
Some details are still being worked out, proponents say, but the general framework shouldn’t change before the single bill outlining all of the spending is introduced.
Conservative groups have lambasted Democrats over the proposal, which was first floated earlier this year. They argue the fees are an end-run around Colorado’s Taxpayer’s Bill of Rights, which requires voters to sign off on new taxes.
They also say it goes against the spirit of Proposition 117 approved by voters in November, which requires voter approval when a new fee-driven enterprise fund is created.
“They’re just ignoring it. Just 100% ignoring it — pretending like that didn’t happen,” Jesse Mallory, who leads Americans for Prosperity Colorado, said on Jon Caldara’s television show in February. “People spoke loud and clear on 117. The politicians are not listening.”
Mallory accused Democrats of trying to use “legal gymnastics” to get around the requirements in 117 and said doing so “sends a terrible message to the voters of Colorado.”
Mallory’s group also conducted a poll in February that found that voters in key Colorado Senate Districts are opposed to a new fee on gas and on deliveries.
“Don’t ever let (Colorado Senate Democrats) tell you they’re fighting for lower income Coloradans again with these proposals,” the Colorado Senate Republican caucus tweeted out in response to the proposal.
But Fenberg says that since the proposal doesn’t call for creating a new enterprise it doesn’t run afoul of Proposition 117.
“This does not have to go to voters,” he said. “We’re talking about fees. We know fees are within the jurisdiction of the legislature.”
Fees are one way that lawmakers can get around TABORs requirements, but courts have said they have to fund something that’s reasonably connected to the fee itself.
At least one Republican lawmaker — state Sen. Kevin Priola of Henderson — is supportive of the Democrats’ proposal, allowing the majority party to say the bill is bipartisan. “Like Utah and other states have done, we need to come together and make investments into our transportation system,” Priola said in a written statement. “Doing so will set our state up for a brighter future.”
Other Democrats say that by rejecting other proposals in recent years to raise taxes and spend more existing taxpayer money on transportation projects, voters have signaled they want the legislature to find a statehouse solution.
“The message we’re taking from voters is: ‘Go solve the problem. Stop asking us to solve the problem for you, just go and do it,’” said state Rep. Matt Gray, a Broomfield Democrat who is helping spearhead the proposal.
State Sen. Faith Winter, a Westminster Democrat who is also among the proposal’s leading champions, said she thinks the idea strikes the right balance. “What we’ve come up with is a pretty creative solution of many small fees,” she said. “Because when all the users of the roads pay a little bit more, we can actually solve big problems.”
Currently, Colorado transportation projects are paid for the by state’s 22-cent-per-gallon gas tax. It hasn’t changed since 1992.
“We haven’t modernized our transportation infrastructure system in a very, very long time,” said House Speaker Alec Garnett, a Denver Democrat. In his speech on the opening day of the 2021 legislative session, Garnett vowed to pass a transportation funding bill even though his predecessors had tried and failed to do so as well.
The proposal also calls for reducing vehicle registration fees in 2022 and 2023, which was teased by Polis in his State of the State address last month, though the details were not immediately released.
It’s estimated the reductions will save Colorado drivers $90 million over those two years before the rates are fully reinstated in 2024.
Here’s how the $4 billion would be spent:
- $1.637 billion would go toward the state share of Colorado’s Highway Users Tax Fund, which is the existing enterprise used to pay for transportation projects
- $1.09 billion would go toward the local share of Colorado’s Highway Users Tax Fund
- $366 million would go toward multimodal transportation projects
- $323 million would go toward expanding electric-vehicle charging infrastructure
- $320 million would go toward fleet-electrification incentives to be distributed by the state health department
- $106 million to help Colorado meet air quality standards
- $81 million would go toward supporting the electrification of public transit
Fenberg said rural roads and Front Range congestion are at the top of the list for where the money will be distributed. His hope is that it will save people money by cutting down on the amount of time they spend in traffic and reducing wear and tear on their vehicles.
Garnett said the plan is balanced in terms of making sure the entire state benefits.
“Our goal is to, in the short-to-medium term, get our existing revenue sources up higher to where they should be,” Gray said, adding that he thinks the proposal will “modernize and future-proof the revenue streams we have right now” as gas vehicles are phased out.
UPDATE: This story was updated at 3 p.m. on Thursday, March. 18, 2021 to reflect that state lawmakers now say they plan to start the fees in July 2022.