Transportation

Coloradans deserve good roads and leaders focused on solutions to our state’s core transportation infrastructure.

Summary

  • One of government’s most basic, fundamental jobs is to provide for core transportation infrastructure.
  • State budgets should be prioritized to make sure funding for core government functions, such as transportation, come first. Money for infrastructure projects and maintenance should come from existing funds and revenue sources, rather than from new taxes or increased tax rates.
  • When we focus on the needs of Coloradans rather than the needs of politicians and special interests, we can fully fund the priority transportation projects our citizens need.
  • Governments should prioritize and fund core infrastructure – i.e. roads and bridges – before diverting resources towards other well-meaning but secondary projects, such as bike paths, wildlife bridges, and beautification.
  • Savings can and should be found in an effort to make the most and best use of taxpayer dollars. Effciencies should be encouraged within the various Departments of Transportation, and red tape, unnecessary environmental regulations, and outdated labor rules should be scrapped.

Issue Background

Maintaining a state’s highways and bridges is one of the most important functions of a of state or local government because it is necessary to the public safety and the facilitation of commerce. However, this should not translate into a blank check for transportation with no oversight or priorities.

Colorado’s state budget for FY 2018-19 was $28.9 billion. CDOT was allotted an operating and maintenance budget of $1.7 billion, mostly from cash funds from state gas tax dollars. This represents merely 5.6% of the overall state budget.

Moreover, for the past several years transportation received no money from the state’s $11.4 billion general fund, until the 2018 legislature passed a measure directing $495 million to be transferred from the general fund to CDOT. This strongly suggests that any lack of transportation funding is not due to a lack of available funds within the budget, but rather a lack of prioritization and allocation of general fund dollars.

While transportation funding may be a core government function, this function needs to be governed with fiscal responsibility. The government has a fiduciary responsibility to the taxpayers, and all efforts need to be made to ensure that the money collected from the taxpayer is spent as wisely, efficiently and prudently as possible, and without increasing the tax burden.

Efficiencies can and should be identified throughout state government, and especially within CDOT to first free up as many funds as possible from the elimination of waste. Analysis should be undertaken to ensure that CDOT’s expenses are in line with states with similar geography, population, and highway miles.

Prioritization of transportation within the state budget to ensure the CDOT is adequately funded is essential; but the corollary to that is ensuring prioritization within CDOT itself, and of where the money goes. Clearly, provisions for road and bridge maintenance, and new road and bridge projects should be the first order of business.

When funds are prioritized for the highest-impact projects, naturally other projects become secondary projects, such as beautification, bike and walking paths, and wildlife bridges. Similarly, public transportation should not receive substantial state funding until the core transportation needs of the state are met.

Based on Colorado’s own experience, as well as successful transportation funding in other states, the most efficient way to pay for major transportation infrastructure projects is through bonding.

The extremely successful 1999 TRANS Bond program, which was paid off in 2017, should serve as an example. The bonding should also be financed through existing revenue sources, or from funds liberated upon maturation of the 1999 TRANS Bonds, as much as possible. Taxes should not be increased to finance bonding when transportation funding currently accounts for less than 6 percent of the state budget.

At the same time, it must be recognized that the bulk of transportation funding is generated from the gas tax. While better fuel efficiency and more electric and alternative-fuel (such as LNG) vehicles on the road should be celebrated, policymakers also should be cognizant that this creates a diminishing revenue stream in gas tax revenue.

It is only realistic to propose an equitable means to replace the current gas tax. However, such an extensive remodel of the way Colorado funds transportation would require thoughtful planning with a broad coalition of stakeholders. Through that process hopefully a tax structure would be identified that ensures all vehicle types contribute to ensuring Colorado has adequate funding for transportation.

Alternatively, relatively minor reforms, such as extending the graduated rate of the Specific Ownership Tax out from 10 to 25 years, could generate between $200 and $500 million in revenue that could be used to finance a new round of bonding.

Nevertheless, before any tax measure is referred to the voters, efforts must first be made to optimize existing revenue. Annual dedicated appropriations from the General Fund should be made to backfill the Highway Users Tax Fund (HUTF), or directly to CDOT.

Reforms need to be made to CDOT itself as well, particularly in the context of transparency and legislative oversight. As a standalone executive department, CDOT is subject to very little oversight from the legislative branch, beyond budget allocation. Considering how important transportation policy is to the state, and the amount of taxpayer money required to administer the department and its operations, reforms need to be made to increase the amount of oversight, authority, and supervision that the legislative branch has over CDOT, to encourage and, if necessary, enforce fiduciary responsibility of scarce tax dollars.

Roughly 34 percent of state transportation funding is from federal sources. While federal transportation dollars are necessary to meet Colorado’s infrastructure needs, several reforms need be made to the way in which federal projects are managed and administered, both to save taxpayer money and to increase efficiency and timely completion. Transportation construction projects, especially those receiving federal dollars, are saddled by a myriad of environmental and labor regulations which add unnecessary time and costs to major projects.

The requirements of the National Environmental Policy Act (NEPA) can add millions to any project. In addition, federal ozone regulations can also derail or add additional millions to construction projects in high-use areas (such as the I-25 corridor through Denver), without significant environmental impact.

Federal labor requirements also drive transportation project costs up. The Davis-Bacon Act from 1931 requires federal contractors to pay at least prevailing wage rates, based on non-federal construction projects in a given county. However, these wage rates are calculated via a flawed, outdated, and unscientific system, which results in the DBA wages in most cases being many times higher the actual market wage rate. This adds millions of dollars to federal transportation construction projects.

In addition, an Obama-era Executive Order still stands, mandating Project Labor Agreements on all federal projects over $25 million. These PLA’s favor union shops and add millions of dollars more to federally funded projects and represent another egregious waste of taxpayer money.

Colorado lawmakers should work with their federal colleagues to implement the reforms necessary to correct these inefficiencies and in so doing save Colorado millions of dollars.

The bottom line is that transportation infrastructure is a vital government service and must be prioritized in the state budget. There is adequate money in the state’s nearly $30 billion budget to fund bridge and highway maintenance, and to finance a further round of bonding to complete major projects, without increasing taxes. Prioritization of transportation within the budget – and subsequent prioritization of core infrastructure over “nice-to-haves” – and a strong dedication to responsible fiduciary stewardship of taxpayer dollars are key to guiding transportation policy into the future and ensuring our state’s infrastructure is safe and keeps up with growth and usage.

Governing Principle

Fiscal Responsibility: Government has a fiduciary responsibility to the taxpayers to make the best, most prudent and efficient use of public revenue. Taxes – money drawn out of the private sector – should be kept as low as possible, and whatever tax revenue that is collected should be prioritized appropriately and not wasted.

Solutions

Federal:

  • Repeal Davis-Bacon wage mandate
  • Repeal labor agreement mandates on federal contractors.
  • Remove barriers to state-based funding
  • Prioritize federal transportation projects, ensuring all taxpayer dollars go to necessary, core infrastructure.
  • Reform NEPA to streamline and simplify the environmental review process, and bring it more in line with economic reality.

State:

  • Prioritize the budget to ensure core transportation infrastructure and maintenance expenditures are covered from existing revenue, rather than through new or increased taxes.
  • Backfill HUTF annually from General Fund.
  • Pursue bonding, in an amount equal to CDOT’s priority project list, to finance major transportation infrastructure projects, patterned after the 1999 TRANS bonds.
  • Oppose the creation of new revenue streams from new taxes or tax rate increases.
  • Increase transparency and accountability within CDOT
  • Ensure CDOT operating expenses are in line with neighboring states with similar geography and number of miles of state roadway.
  • Prioritize transportation projects to focus on core infrastructure (i.e. roads and bridges) rather than environmental and public transportation projects. Public transportation should be funded with surplus dollars.

Key Statistics

  • Colorado State Operating Budget FY2018-19: $30.63 billion (Joint Budget Committee)
  • Colorado State General Fund: $11.42 billion (JBC)
  • Transportation spending makes up 5.6% of state operating budget (JBC)
  • Between FY 2003-04 and FY2015-16 transportation spending in the state has remained flat, while all other spending has gone up (CAFR various years, Independence Institute)

Resources:

Independence Institute
Transportation issue page
https://i2i.org/transportation/

A Decade of Colorado Road and Transportation Spending in Pictures
https://i2i.org/wp-content/uploads/2015/01/IB_A_2017_a.pdf

Joint Budget Committee
Colorado 2018-19 Budget in Brief
http://leg.colorado.gov/sites/default/files/fy18-19bib.pdf

JBC Appropriations Report FY2018-19
http://leg.colorado.gov/sites/default/files/fy18-19apprept_0.pdf

Associated General Contractors of America (AGC)
AGC Urges Trump Administration to Rescind President Obama’s Project Labor Agreement Executive Order
https://www.agc.org/news/2018/01/26/agc-urges-trump-administration-rescind-president-obamas-project-labor-agreement

Heritage Foundation
Why the Davis–Bacon Act Should Be Repealed
https://www.heritage.org/jobs-and-labor/report/why-the-davis-bacon-act-should-be-repealed

Colorado Department of Transportation
State Funding Sources

https://www.codot.gov/programs/colorado-transportation-matters/images/cdot-funding-sources/view