New fees on gas, deliveries, rideshare proposed to raise transportation funding in Colorado

Coloradans will chip in a few cents more on gas fill-ups and pay extra to have online purchases delivered, take Uber and Lyft rides, and register electric vehicles to help raise nearly $4 billion over a decade to fix the state’s transportation system, under a plan lawmakers unveiled Thursday.

Nine new fees pitched as part of an all-encompassing funding proposal — including 25 cents to have an Amazon purchase delivered and 30 cents for a Lyft ride — would touch nearly every resident, business and traveler who uses the roads in some way, though some still are being fleshed out. The majority Democrats behind the forthcoming bill estimate the rough collective impact on each consumer at $28 a year.

Though the bill that will propose the fees is still being drafted, it’s been talked about for most of this year’s legislative session. It marks the latest attempt by lawmakers to tackle a longstanding, multi-billion-dollar shortfall for maintenance and expansion of Colorado’s highways and its broader state transportation network — a problem Colorado has fallen well short of many other states in addressing.

So far, at least one Republican has voiced public support, but some lawmakers in that party are vocally opposed to new fees.

If this latest bid is successful, the new fees would help offset Colorado’s dwindling gas tax revenue as a major funding source for highway repairs and expansions — while ramping up the amount of money available to support more electric vehicles (and convert fleets to electric), expand transit options and reduce the air pollution emitted by vehicles on Colorado’s roadways.

In fact, the proposal summary says $724 million of the projected $3.9 billion raised from the various new fees in the next 11 years would go toward efforts to fulfill the state’s Greenhouse Gas Pollution Reduction Roadmap.

Another $366 million would go to an expanded state multimodal options fund that supports transit and alternative mobility projects — including, potentially, laying the groundwork for the proposed Front Range Rail line. That fund would also chip in money to reduce road projects’ environmental impacts, while another $106 million portion of the fees would go toward a new fund to help mitigate environmental problems in Front Range communities that don’t meet federal standards.

But the bulk of the money raised by the new fees — $2.7 billion over 11 years — would, like the existing 22-cents-per-gallon gas tax, go into the Highway Users Tax Fund. That fund is divvied up between the state, which gets 60%, and local governments across Colorado to put towards transportation projects.

The Colorado Department of Transportation would receive significant money to tackle much of its 10-year, $5 billion priority project plan, which is currently one-third funded.

But the ambitious plan is hardly a Colorado transportation moonshot — it still would leave CDOT reliant upon federal grants and other funding to finish that project list.

The fees would be here to stay, however, raising money beyond that first decade.

“The bottom line is we want to make sure this is a meaningful and significant step toward funding our transportation problems in this state,” Senate Majority Leader Steve Fenberg said. “This is not going to be just a one-off (attempt). We really want to structurally change how we think about transportation funding — and how we think about how we’re going to use transportation in the future.”

That means providing significant money to repave thousands of miles of rural roads, he said. And it means big investments in electrification for a future when gas-guzzlers become a thing of the past.

“If we’re successful … we actually think this bill is going to save people money,” Fenberg said, noting the hundreds of dollars a year in repair and operational costs caused for drivers by deteriorating roads.

Aside from new fees, the plan also envisions another $1.2 billion going to transportation in the next decade or so, though much of that’s already planned. That includes $430 million in stimulus money and $800 million from ongoing annual general-fund transfers to CDOT to help pay off debt from other recent transportation initiatives, with some of the fees supplementing those payments.

Short-term relief before fees start

The new fees wouldn’t take effect for more than a year, until the 2022-23 fiscal year.

In the meantime, in a nod to a recent public request from Gov. Jared Polis, the sponsors say they will propose slight reductions in vehicle registration fees in 2022 and 2023 as short-term relief for vehicle owners — totaling $90 million, or about $10 a year for the average owner.

Here is a look at some of the proposed fees:

• Gas: A new fee, collected at the wholesale level, would trickle down to consumers at the pump and start at 2 cents per gallon, costing the average driver about $10 a year. It would rise by 2 cents every two years until it reaches 8 cents. Starting in mid-2032, the fee would be indexed to a road construction cost index to rise with inflation.
• Trucks: Trucks that run on diesel would pay an extra 6 cents per gallon. The fee would rise to 8 cents by mid-2026, with indexing starting in mid-2032.
• Deliveries: Consumers would pay a flat 25-cent fee on online purchases that are delivered by vehicle, to offset the impact of deliveries on roads, congestion and the environment. Deliveries that don’t use trucks or automobiles would be exempt.
• Electric vehicles: Owners already pay an extra $50 on their registrations each year, and that would begin rising with inflation. New additional fees would be added to approximate the loss of fuel taxes from electric vehicles, with steady increases phased in: $9 a year for full-electric vehicles, rising to $90 by mid-2031; and $3 a year for plug-in hybrids, rising to $27 by mid-2031. Installment payment options are expected.
• Ride-hailing: App providers such as Uber and Lyft, known as transportation network companies, would have to pay a flat 30-cent fee per trip, or 15 cents per shared ride or rides in zero-emission vehicles. Those fees would rise with inflation.
• Other fees: Others would apply to personal car-sharing services ($2 per day), car rentals (an existing $2-per-day fee would be newly indexed to inflation), taxi rides and, once they become more viable, autonomous vehicles. The latter two fees are still being worked out, however.

According to state projections, the gas and delivery fees would be the biggest moneymakers, each bringing in more than $1 billion over a decade.

The major details of the coming proposal have been promised for weeks, as Sen. Faith Winter and Rep. Matt Gray, who chair their chambers’ transportation committees, fine-tuned them in conversations with a wide — and delicately balanced — range of interests.

The talks have included Polis’ advisers, road and transit advocates, local government officials, environmental groups and industries that including trucking and ride-hailing companies. But those stakeholders got their first look at the specifics of the proposed fees on Thursday, with the summary’s release.

Polis, in a statement, called the proposed fees package “a reasonable long-term solution to future-proof and ensure sustainable transportation funding in our state.”

Also signing up as leading sponsors of the bill are Fenberg and House Speaker Alec Garnett. The draft is expected to be introduced in the next couple weeks, Fenberg said.

But if the bill passes, it will be over the vocal opposition from many Republicans — stuck in the minority — who see such fees as an end-run around the state’s voters. They and conservative activists consistently urge the state to make better use of its existing budget for transportation spending.

And some opponents say the proposed fees would violate the spirit of Proposition 117, which Colorado voters approved last fall. It requires going to voters to create new fee-based enterprises of a certain size, similar to the longstanding requirement for votes on taxes under the Taxpayer’s Bill of Rights.

But the Democratic lawmakers say some new fees will use existing state enterprises with fee-issuing authority, and any new ones would generate less than the threshold of $100 million in the first five years.

At least one Republican lawmaker voiced support for the budding proposal this week.

“We desperately need to modernize our transportation system,” said Sen. Kevin Priola, R-Henderson, in a statement. “For almost 30 years, we’ve been kicking the can down the road and as a result, we’ve seen traffic congestion massively increase and our roads fall into disrepair.”

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