TABOR-related refund could cut Colorado's highway funding.

DALLAS — Colorado Gov. John Hickenlooper has proposed reclassifying some state revenues to prevent a looming refund to taxpayers triggered by the state's Taxpayer Bill of Rights law that could slash available transportation funding by $200 million over two years.

Colorado transportation officials said the TABOR law, which limits how much tax revenue that state and local governments can collect and spend, would cut funding by $100 million per year in 2017 and 2018 from a state law that provides at least $200 million per year for highway and transit projects over five years.

Hickenlooper's solution to avoid the transportation cuts is to reclassify as an enterprise fund the revenue from a provider fee on hospitals that the state uses as its match for federal Medicaid funding.

That would remove revenues from the hospital fee, which is expected to generate $730 million in fiscal 2017, from the TABOR calculation in future years to reduce the refunds mandated by the constitutional amendment approved by Colorado voters in 1992.

The rebates are required when the state hits a revenue ceiling that is based on inflation and population growth. The proposed refunds would be the first in more than a decade.

Absent the reclassification, the first rebates in 2017 would average an estimated $15 to $50 per taxpayer. However, a temporary state income tax break could raise the average payback in 2018 to about $100, according to the governor, or as much as $682 for single filers and $836 for joint filers, according to legislative projections.

The funding law, S.B. 228, provides for five years of transfers of general revenues to the transportation fund if certain economic goals are met. The law allocates 10% of the transfers to transit projects.

In anticipation of the additional $1 billion that could be available over five years, Colorado DOT identified $2.3 billion of statewide projects that could move forward with the funding.

Cutting the funding in half would leave the Interstate 70 East project in Denver with a funding gap of $90 million. Also, none of the other projects would be built, state highway officials said.

The TABOR refunds would leave the state with a $450 million transportation project shortfall, including $221 million of maintenance work, $41 million of bridge upgrades, and $188 million for pavement improvements.

Hickenlooper over the weekend denied published reports that he urged lawmakers, during an address last week to a civic club in Grand Junction, Colo., to raise the state's gasoline and diesel taxes by 10 to 12 cents per gallon to provide more money for highway and transit. The governor said he would support a gasoline tax increase, but only if a majority of lawmakers in both legislative chambers agree to the hike.

"If you got all the Republicans and all the Democrats and all the legislators unified in this, I'd be happy to stand beside them," said Hickenlooper, a Democrat. "I certainly did not call for a gas tax hike."

The state's gasoline tax of 22 cents per gallon and the diesel tax of 20.5 cents per gallon have not been raised since 1993. Colorado's fuel taxes generated $303.3 million in 2014, up 3.5% from $293 million in 2013.

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