A nearly $5.4 billion transportation bill passed by the Colorado legislature will tackle several big-ticket items at the same time — fixing and expanding highways, boosting transit and other alternatives to driving, and rapidly expanding the use of electric vehicles.
There was a lot to debate in Senate Bill 260, Democratic lawmakers’ bid to stake out sustainable funding streams for transportation into the future and address climate change. They proposed a half-dozen small new road-user fees that are projected to raise billions of dollars — and will affect most people in the state — all while navigating around state fiscal roadblocks that would have required going to voters to pass more straightforward tax increases.
The package includes serious money for projects at both the state and local levels. And the electric vehicle programs that lawmakers envision would be among the nation’s most ambitious, aiming both to increase the number of clean-energy vehicles on the roads and to expand the charging infrastructure to support them.
The bill passed the House June 2 on a party-line vote after passing the Senate May 17, with one Republican supporter.
On June 17, Gov. Jared Polis signed SB-260 into law.
Here is a look at the bill’s major components, updated to reflect the final version:
How much the bill will raise
The bottom-line projection over the next 11 state fiscal years — through 2031-32 — is nearly $5.4 billion, up slightly from nearly $5.3 billion when the bill was introduced. Of that, about $3.8 billion is estimated to come from the new fees over 10 years, starting when they take effect in mid-2022.
The rest, $1.6 billion, comes from state budget transfers — many of those already planned from prior transportation commitments — and new state and federal stimulus dollars approved in recent months. A small portion of the budget transfers will recur each year.
Lowdown on the fees
While some of the proposed fees will increase on set schedules initially, all eventually will be pegged to inflation or another index that accounts for rising construction costs. Collection of most fees will begin in July 2022 and continue beyond 2032, with no sunsets.
However, lawmakers in spring 2022 approved a bill delaying implementation of the road usage fee until April 1, 2023. Stimulus funds will be used to replace nine months of forgone fee revenue.
Fees are listed by how much they’d bring in over the first decade:
- Road usage fee ($1.6 billion): This fee on gas and diesel fuel purchases will begin at 2 cents per gallon, ratcheting up a cent per year to 8 cents in mid-2028, with inflation adjustment beginning three years later. It will be on top of the state’s existing 22-cents-per-gallon gas tax.
- Retail deliveries ($1.2 billion): A 27-cent delivery fee will apply to orders — including those made online — for goods and most other items subject to sales tax, including restaurant food.
- Bridge and tunnel impact fee ($401 million): This separate fee, assessed on diesel fuel purchases based on trucks’ heavy impact on bridges and tunnels, will follow the same schedule as the road usage fee above, starting at 2 cents and rising to 8 cents by mid-2028. The combined initial fees on diesel fuel purchases, once both types take effect, will be 4 cents per gallon.
- Electric vehicle registration fees ($322 million): The state’s existing $50 registration fee for plug-in electric vehicles will be pegged to inflation. New annual EV fees will be phased in on a 10-year schedule to offset owners’ tax savings by not buying gas. For plug-in hybrids, the fee will start at $3 and rise to $27, and for full-electric vehicles, it will start at $4 and rise to $96.
- Ride-hailing fees ($203 million): A 30-cent fee will apply to prearranged rides provided by services such as Uber and Lyft, with a discounted 15-cent fee if the ride is in a zero-emissions vehicle. The fee doesn’t apply to taxis, but the bill orders the state to conduct a “parity study” for that industry.
- Car rentals ($92 million): An existing $2 per day fee for car rentals up to 30 days will be indexed to inflation, and the fee will newly apply to car-share rentals lasting 24 hours or longer.
Bill sponsors say an analysis estimates the average consumer impact from the fees in the first year at $28, though that figure will rise each year. The bill includes short-term reductions of vehicle registration fees for all drivers of $11.10 in 2022 and the same amount in 2023, with those fees reverting to normal in 2024. (The 2023 amount was increased by lawmakers in subsequent legislation to match the 2022 reduction.)
How the money will be spent
Here is the breakdown of spending through mid-2032, according to a Denver Post analysis of legislative documents and summaries. Percentages are rounded, and some figures are approximate.
- $2 billion (38%): New state projects, mostly work on highways, bridges and tunnels.
- $947 million (18%): Local governments’ distributions from a highway fund for use on local projects and maintenance.
- $855 million (16%): Paying off debt taken under previously approved transportation bills and offsetting registration fee reductions in 2023 and 2024.
- $734 million (14%): Electric vehicle programs aimed at rapidly increasing adoption of clean-energy vehicles — including the conversions of fleets — and providing more charging stations.
- $453 million (9%): Multimodal Transportation and Mitigation Options Fund, with the money available to pay for projects that support alternatives to driving, including transit, bikeways and pedestrian improvements, as well as air-pollution mitigation. Eighty-five percent will go to local governments.
- $234 million (4%): A state air pollution mitigation fund under the Colorado Department of Transportation that will pay for projects in the Denver metro area and the northern Front Range, which violate federal ozone limits, to reduce vehicle traffic and air pollution. Potential projects include vegetation planting, programs to shift people from driving to mass transit, and retrofits for construction equipment. A special focus will be on communities near highways and those that have high shares of households with low incomes or racial or ethnic minorities.
- $115 million (2%): CDOT’s Revitalizing Main Streets program, which gives grants to local governments to fix up state highways through their downtowns to improve infrastructure and increase safety for pedestrians and other users.
Much of the state funding in some categories will go toward CDOT’s 10-year, $5 billion priority project plan, though it will not be fully funded.
How the bill side-steps TABOR
Raising taxes in Colorado requires asking voters under the Taxpayer’s Bill of Rights. By proposing user fees and using existing and new state enterprises to charge them, lawmakers are sidestepping TABOR. It’s a step that draws ire from Republicans in particular.
SB-260 also avoids a new requirement for voter approval of larger fees under Proposition 117, which voters passed in November, when a new state enterprise will raise more than $100 million in the first five years. The four new enterprises the bill will create include three geared toward dealing with different aspects of electric vehicles that, if combined, potentially would exceed 117’s threshold.
But the bill’s sponsors and some legal analysts argue each of those three has a different purpose — increasing the community’s adoption of clean vehicles, converting fleets to electric and supporting clean transit. It’s possible the bill could face a legal challenge if it’s passed into law.
Other components of the bill
As passed, the bill also will:
- Require CDOT to create an environmental justice and equity branch in its engineering and construction division. That small office will work with communities potentially affected by new projects.
- Extend exemptions in the vehicle emissions testing program from seven years to 10 years for new cars and 12 years for plug-in hybrid vehicles, if federal authorities approve the request.
- Cancel parts of bipartisan transportation-funding compromises passed in 2017 and 2018. Those include a reduction in the state’s TABOR limit, which will allow $225 million more in spending in the coming fiscal year, and a delayed plan to send a $1.3 billion transportation bonding measure to state voters in November.
- Require CDOT and regional planning organizations, including in Denver, to assess the potential for highway expansion projects to increase air pollution and traffic volume.
- Allow those regional organizations to act as regional transportation authorities — potentially seeking voter approval for their own transportation-funding measures.
