As Colorado steers toward more electric vehicles — a major initiative of the Polis administration — the impact on the state’s revenue from gas taxes is expected to continue to head south.
And that means less money for transportation projects.
Two lawmakers — one Republican, one Democrat — hope to stave off an expected decline in the already low gas tax revenues collected by the state that go into the state’s Highway Users Tax Fund.
The gas tax hasn’t been updated since 1991, when it was set at 22 cents per gallon. While that’s good news for consumers who use gas-powered vehicles, it’s not so good for state transportation that relies heavily on those taxes.
The Colorado Department of Transportation estimates that the gas tax brings in about half as much revenue as it did almost 30 years ago, with more drivers using other forms of fuel, such as natural gas and electric. At the same time, the costs of upkeep for the state’s roads has doubled, CDOT claims.
“With increased vehicle fuel efficiency resulting in less gas tax revenues, increased population and VMT creating more wear and tear on the roads, and declining purchasing power with the value of the dollar worth half of what it was in 1991, CDOT is facing a $25 billion funding gap over the next 25 years,” according to a CDOT fact sheet on the gas tax.
Raising the gas tax has been floated in the past, but it isn’t seen as a strong source of revenue for the state’s backlog of $9 billion in road and bridge projects over the next decade.
So what’s the solution? According to Republican Sen. Kevin Priola of Henderson and Democratic Rep. Matt Gray of Broomfield, it could be in switching to a sales and use tax and getting rid of the state’s gas tax altogether.
Gray told Colorado Politics Thursday that Senate Concurrent Resolution 3 would end Colorado’s gas tax. In its stead, the state would bump up the state sales and use tax. Gray said he believes the first year would actually be revenue negative, but revenue positive in succeeding years.
“We need a different and sustainable revenue sources” for transportation, Gray said Thursday.
The bill does not affect federal gas taxes, which would still be collected and remitted back to the federal government.
SCR 3 would address two funding issues for transportation, Gray said: the backlog of projects and that it is more of a long-term solution for transportation funding. Gray said at some point the state might be able to bond against those increased sales and use taxes to cover that backlog, but that isn’t in the measure being considered by the General Assembly.
The concurrent resolution, if adopted, would go to voters in 2020. But it will need a two-thirds vote in both chambers — 44 votes in the House and 24 in the Senate.
That means it needs “nontrivial Republican support,” Gray said Thursday.
He’s not recommending anyone hold their breath over whether the measure will pass this year, but “it’s an important conversation to have. I want to elevate all conversations (around transportation funding) until it’s done.”