Colorado Gov. John Hickenlooper signed the pension reform bill June 5.
“There are some who believe we can pay for our infrastructure needs through cuts alone,” said Colorado Gov. John Hickenlooper. “Tell us who loses healthcare or what schools have to close to add a mile of highway.”

DALLAS – Colorado Gov. John Hickenlooper voiced support for a $3.5 billion bond proposal expected in the 2017 Colorado General Assembly as he urged lawmakers to develop new funding for transportation projects in the state.

"Let's examine all our options," Hickenlooper told lawmakers in his State of the State address Tuesday. "Whether it's new revenue, simplifying or replacing old tax streams, or a combination of both."

With the state facing a $9 billion backlog of highway and bridge projects, funding for any new work beyond maintenance has been lacking for years. In the 2016 legislative session, the proposed $3.5 billion bond program backed by a sales tax increase failed in the waning days.

Leaders of the Republican-controlled Senate and Democratic-controlled House have spoken favorably about the proposal.

"Getting most of these projects underway in a timely manner will require the ability to leverage our revenue streams through Revenue Anticipation Notes, or bonds," said Senate President Kevin Grantham in his opening-day remarks. "There are yet many details to work out but the potential is great this session for a truly bi-partisan solution to our roads and highway infrastructure funding.

In his weekly interview with Colorado Public Radio, Hickenlooper said he favors asking voters to approve a revenue stream that would support bonds for the highway projects. In Colorado, all tax increases require voter approval.

"Let's put a limited time limit on it, so it's not open ended," Hickenlooper said. "People in Colorado have a resistance to open ended tax measures. Let's go out there and get an annual revenue stream that allows us to deal with the most critical infrastructure shortage we have."

Hickenlooper said he was not wedded to a sales tax increase as the revenue source for the bonds.

"I've had discussions with both the president of the Senate, Kevin Grantham and the Speaker of the House, Crisanta Duran," he said. "I think there's a willingness to listen and try and figure out what is it the people of Colorado want. Municipalities generally frown on the state raising the sales tax because municipalities invest their sales tax, their share of it, as a critical part of their revenue source."

Increasing the gasoline tax is another option, as is an income tax increase, Hickenlooper said.

"I'm not ruling out sales tax," he said. "I'm just saying there are pros and cons with each one."

Hickenlooper told lawmakers that "voters are tired of us kicking the can down the road, because they know it's going to land in a pothole."

Already facing a revenue shortfall, Hickenlooper disparaged the idea of cutting other programs to build highways.

"If that's what you want, introduce that bill. Make that case," he said. "Tell us who loses healthcare or what schools have to close to add a mile of highway."

To close a $135 million revenue shortfall in the upcoming budget, Hickenlooper called for a 50% increase in sales taxes on recreational marijuana starting July 1 to send an additional $42 million to public schools.

He also proposed cutting the senior homestead property tax exemption in half, freeing another $68 million for schools. The shift would allow seniors to claim a tax break on the first $100,000 in their home value, rather than the first $200,000 allowed in current law.

The shortfall is the result of a $135.1 million reduction in property taxes triggered by the Colorado Constitution. The so-called Gallagher amendment requires that the total property tax burden in the State be shared more by non-residential owners than by residential owners. Because residential values have grown faster than non-residential values and the relative burdens are out of compliance with the Constitution, the mechanism to adjust the burden is to lower the residential assessment rate.

"One part of the Constitution lowers property taxes for schools and shifts the burden to the State, and another part of the Constitution says the K-12 school budget has to grow. This is a prime example of why we call our budget rules a 'fiscal thicket,'" said OSPB director Henry Sobanet, director of the Office of State Planning and Budget.

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