Continuation of Transportation Discussion
INTERIM COMMISSION TO STUDY FISCAL STABILITY
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01:25 PM -- Continuation of Transportation Discussion
Senator Heath called the committee to order and talked about the earlier discussion about the differences between wants versus needs. He asked Mr. George what the state needs to provide in order to have a safe highway system. Mr. George estimated that for FY 2011 about $1.3 billion is needed to keep the state in its current state. He calculated this by adding the Highway Users Trust Fund (HUTF), which stays relatively stable at about $500 million, with the FASTER dollars that will be about $200 million, with the federal funds that he expects to be at least $100 million. Those numbers total $800 million. He explained that at $800 million, the department would do only maintenance projects. Mr. George said that an additional $500 million more would allow the state to maintain the system as it was in 2007.
There was a discussion about the state gas tax, which is 22 cents a gallon for regular and 24 cents for diesel. The federal tax is 18 cents a gallon. Senator Brophy calculated that if 22 cents a gallon generates the state about $500 million a year, then the 18 cent federal tax should generate more than the $100 million Mr. George expects the state to receive this year. Mr. George stated that the funding is front-end loaded over a 5-year period, and that the numbers were higher at the beginning of the federal program. Mr. George said the current federal legislation expires in September and will be renewed at that time for 5 years. Mr. George explained that it may be more than $100 million, but they will not know until this legislation is passed. Mr. George also explained that the only piece of the money that can be bonded against is the $100 million for bridges from federal funds.
Senator Heath pointed out some suggestions to address the $500 million shortfall from page 37 of the 2008 blue-ribbon report, including a motor fuel tax increase, a sales and use tax increase, a severance tax increase, a visitor fee, or a highway maintenance fee. There was a discussion about vehicle miles traveled (VMT) versus fuel usage as a source of revenue. Ms. Cooke talked about prioritizing projects and maintenance and then funding them from the top down using the $800 million. She talked about potentially looking at outsourcing the remaining projects. Mr. George explained that the current transportation budgeting system does use prioritization to determine what gets funded with the money they receive.
Senator Heath asked the commission if it feels that the $800 million is sufficient for transportation. Representative Court asked the department to list its priorities within the categories provided on page 37. Representative Gerou said Colorado does not spend money on revenue drivers, such as roads. Senator Brophy added that the commission should focus more long term than on fixing the current budget. He offered an idea of taking the money dedicated to K-12 that will be freed up in FY 2011, the plus the 1 percent inflation piece, to fund transportation. Senator Morse suggested finding the bottom line for each of the big departments before figuring out how to pay for them.
Senator Heath explained to the committee that they are trying to figure out what to fund and then they will determine how to pay for those things at the November meetings. There was a discussion about talking about how to fund programs while they determine need rather than at the last two meetings. Ms. Neilson asked Mr. George about privatizing maintenance. Mr. George explained that contracts are used in certain circumstances and that they try to contract out based on cost savings. Mr. Conway talked about his concerns regarding the highway fund and asked whether Mr. George feels it is sustainable and what ideas, if any, he has heard about to replace it if the fund were to become insolvent. Mr. George said that the American Association of State Highway and Transportation Officials is advocating a gas tax increase, a federal infrastructure bank funded by federal general funds, and VMT. Ms. Cooke asked Mr. George what $1.3 billion would provide the state.
Ms. Boigon urged the commission to talk about innovative changes as opposed to maintaining the current system. Mr. Hume brought up looking at neighboring states.
Senator Heath wrapped up the discussion on transportation.