Colorado Legislative Council Staff



TABOR Refund Impact

No State General Fund Impact

Cash Fund Revenue and Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-703

Rep. Pfiffner

Sen. Congrove


Bill Status:

Fiscal Analyst:

February 7, 1998

House Transportation

Scott Nachtrieb (866-4752)



Summary of Legislation


FY 1998/99

FY 19998/00

State Revenues

             General Fund

             Cash Fund



State Expenditures

             General Fund

             Cash Fund (From RTD)



FTE Position Change



Local Government Impact —RTD would experience cost savings from privatization

            The bill would increase the required percentage of privatized bus service operations that the Regional Transportation District (RTD) must provide from 20% to:

          25% from July 1, 1999, until July 1, 2000;

          30% from July 1, 2000, until July 1, 2001;

          35% from July 1, 2001, until July 1, 2002;

          40% from July 1, 2002, until July 1, 2003;

          45% from July 1, 2003, until July 1, 2004; and

          50% on and after July 1, 2004.

            The required percentage would increase after July 1, 2004, if RTD does not meet the specified cost performance standards. RTD would be allowed to contract for private bus service below the requirements if the bids received do not provide a cost savings of at least three percent less than the RTD’s cost for those services. RTD would be prohibited from contracting for less than 20 percent of its bus services.

            RTD could not require a private provider to purchase RTD buses unless the acquisition costs for the private provider were less than RTD’s. RTD and its employees would be allowed to form distinct business units and submit bids for services offered for privatization under specified procedures and restrictions. Distinct business units would be considered the same as private businesses in meeting the required privatization requirements. The State Auditor would contract with a private auditing firm to perform an audit of the costs of providing bus service by the RTD, distinct business units of the district, and private providers. RTD would reimburse the state for the costs of conducting the audit. The State Auditor would report to the House and Senate Transportation Committees on or before July 1, 1999, concerning the audits findings. The bill will become effective at 12:01 a.m. on the day following the ninety-day period after adjournment sine die of the General Assembly, or on the date of the official declaration of the vote of the people as proclaimed by the Governor, if a referendum petition is filed pursuant to Article V, Section 1 (3) of the State Constitution.

TABOR Refund Impact

            Section 20 of Article X of the Colorado Constitution, limits the maximum annual percentage increase in state fiscal year spending. Once total state revenue from all sources that are not specifically excluded from fiscal year spending exceeds these limits for the fiscal year, the state constitution requires that the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset. Based on the current Legislative Council economic forecast, it is projected that the state will be in a TABOR refund position during each of the next five fiscal years. Any increase or decrease in state revenue from changes in fees, fines, licenses, or other revenue sources will affect the amount of the state revenue to be refunded.

State Revenues and Expenditures

            The State Auditor would be required to contract with a private auditing firm to conduct an audit concerning a comparison of RTD bus operations and private contractors. The audit would also evaluate the method for calculating costs for RTD and private contractors. This audit would cost the auditor approximately $30,000. The cost of the audit would be paid by RTD.

Regional Transportation District Impacts

            RTD would have a significant impact as a result of this bill. Any savings RTD would experience would be based on the routes that were privatized, the development of competitive distinct business units, and other management decisions that RTD may make in order to reduce costs. The amount of any savings has not been estimated at this time. However, a 1991 performance audit conducted by KPMG Peat Marwick in association with Mundle & Associates, Inc. Transportation Support Group, Inc., indicated RTD experienced a $2.5 million annual savings as a result of privatizing about 25 percent of its service. Continued privatization would be expected to create additional savings to the district.

            The study reported that a significant portion of the savings was attributable to lower operating costs. Contractors actual operating costs were 45 percent lower than RTD’s allocated actual costs and 41.9 percent lower if capital costs were included. Most of the operating cost savings (38 percent) were the result of lower bus operator wages and fringe benefits paid by contractors. Another 14 percent came from lower wages and fringe benefits paid to mechanic, service, and utility worker wages.

Spending Authority

            This fiscal note implies that the State Auditor would require $30,000 in Cash Fund spending authority for FY 1998-99 to implement this bill.

Departments Contacted

            Auditor                       Transportation