DALLAS – Colorado business leaders will lobby for a $3.5 billion transportation bond program when the General Assembly convenes in January, but constitutional hurdles and slowing revenues could stand in their way.
The proposal would require voter approval if and after lawmakers agree to put the proposition on the ballot.
A similar bill failed in the 2015 session when the Colorado Department of Transportation said the measure would divert future maintenance funds toward debt service on the bonds.
In the next session, a coalition called Fix Colorado Roads seeks at least $83 million a year from the state's general fund to support the debt. Doing so would reduce CDOT's reliance on fuel taxes for major upgrades.
"We can't stay stuck in neutral on the state's highway problems," wrote David May, chairman of the Fix North I-25 Business Alliance in a letter to Gov. John Hickenlooper. "It's time to step on the gas and find the answer that will work for our economy, our taxpayers and the motoring public."
May's organization, which is focused on expanding Interstate 25 between Denver and Fort Collins to the north, is one member of the Fix Colorado Roads coalition. Other business groups include the South Metro Denver Chamber and Colorado Business Roundtable, Northern Colorado Legislative Alliance, Club 20 and Colorado Business Roundtable.
Lobbyist Sandra Hagen Solin, who will seek support for the bill in the state House and Senate, said bonds would accelerate funding for the state's neglected transportation system without requiring voters to raise taxes.
One study of just the I-¬25 corridor claimed that businesses there are losing $56 million in revenue each year due to congestion, according to the coalition.
"Those challenges are replicated along the I-¬70 West corridor and other important corridors throughout Colorado," the coalition's letter to Hickenlooper said.
The road funding bill will compete with other urgent priorities, including public schools and higher education, as Colorado's economic boom shows signs of slowing.
"The contraction in the oil and gas industry, a tight labor market, and various global economic headwinds are contributing to slower growth in employment levels and in some categories of state taxes," according to a Dec. 21 report from the Governor's Office of State Planning and Budget. "The diversity in the Colorado economy and continued in-migration of new residents adds resiliency against dragging factors."
The forecast sees general fund revenue growing 2.1% in the current fiscal year ending June 30. That projection is 1.7% lower than the previous quarterly report in September.
"Corporate income tax collections continue to decline and under perform expectations as a result of weak corporate earnings," the report said. "Further, declining oil prices have also lowered expectations for income tax revenue from royalty payments."
In the next fiscal year beginning July 1, general fund revenue growth is expected to rebound, the report said.
"However, the FY 2016-17 General Fund revenue growth rate of 6.7% is still below the rates experienced in most years of the current expansion," the report said.
Under the latest forecast, the state's general fund reserve is expected to be $156 million below the required amount of 6.5% of appropriations in the current fiscal year.
"Transfers to capital construction and transportation will occur at full amounts in FY 2015-16, and at half amounts in FY 2016-17," the report said. There are no transfers expected in FY 2017-18.
The state's Taxpayer Bill of Rights, or TABOR, constitutional amendment requires state and local governments to refund any revenue increases that have not been approved by voters.
TABOR revenue will be below the limit requiring a refund the current fiscal year and above the limit by $212 million in the next fiscal year, according to the report. In the following fiscal year, revenue will exceed the TABOR limit by $341 million.
On the education front, the quarterly state forecast projects that lawmakers will have the option of restoring about $159 million to public schools based on TABOR and a school funding formula. Lawmakers could let school districts retain that amount, or they could reduce the state's contribution to current 2015-16 spending. Funding for schools is based on a combination of state and local revenues.
Total school funding from state and local sources is expected to be about $6.2 billion this year. If there's more local revenue than projected, the state is allowed to reduce its share.
In September, the state Supreme Court ruled that $5 billion of educational funding withheld since 2011 did not violate the constitution.
School districts across the state sued to restore the funding to levels required by a defined formula approved by voters. As Hickenlooper has complained, voter-approved constitutional amendments often provide conflicting guidance for policy makers.
"The state Supreme Court decision foreshadows education funding levels below the state's defined formula for the foreseeable future," Moody's Investors Service noted in a report. "Subdued funding levels will continue to place pressure on individual school district budgets, requiring local management teams to hold down expenditures and/or seek additional taxpayer authorization to augment tax rates to maintain operations and reserve levels."
The ruling dismissed a June 2014 lawsuit brought by school districts and parents, which claimed that the educational funding cuts were unconstitutional and did not adhere to Amendment 23. The voter-approved Amendment 23 requires that base per-pupil funding levels increase on an annual basis.
The state Supreme Court ruled that the cuts have not affected the base per-pupil funding amount. A "negative factor" provision of the law allows the state to adopt its budget for education at a level below the calculated funding formula so long as the base per-pupil increases by the rate of inflation.
"The negative factor provision has created a $5 billion discrepancy between the state's defined funding formula and actual total education funding from fiscal 2011 to fiscal 2016," Moody's noted. "The negative factor amount increased significantly through fiscal 2013 and remained around $1 billion annually as state legislators have continued to approve educational appropriations below the funding formula."
