Alternative Funding for Transportation
by John Kiljan
[updated 19 March 2016]
In an earlier article, I wrote that a 0.5% sales tax increase would cost an additional $65 a year for an average Arvada family – based upon a median income of $68,210 a year and some estimates used by urban renewal when figuring housing project benefits. But what would other alternative sources of funding for transportation improvements cost an average family?
The clue to that is in the “Possible Funding Scenarios” chart included in the Council workshop packet. The chart doesn’t say what it would cost a typical family for each scenario, but one can easily work that out with the numbers that are given. Let’s look at each Revenue Source listed and see what it tells us. Don’t be frightened by the math. I’m doing all the number crunching for you.
For SALES TAX, the 0.5% increase would generate $9,269,110 per year (= 5 X $1,853,822) as the presentation slides say, and let’s just call it $9.3 million a year. And my own calculation is that the cost for an average Arvada family for that increase would be about $65 a year (= $68,210 X 0.35 X 0.54 X .005), since that family would be spending 35% of its income on retail purchases and 54% would be spent in Arvada itself.
For PROPERTY TAX, to get the same amount, it would mean a new 7.2472 mill levy on a yearly property tax bill (= $9,269,110 / $1,279,000 per mill). The City said it considered 8.00 mills in its estimate, but I’m using the lower number so we’re comparing apples with apples.
Arvada already has a 4.31 mill property tax. So, how much more would that amount to on your property tax bill? Well, that depends upon your “Actual” and “Assessed” property values – or your landlord’s, if you rent. The more your digs are worth, the more you pay.
Using my own annual property tax bill and prorating it for different property values, I came up with these amounts:
Actual value = $200,000, tax increase = $115/year
Actual Value = $250,000, tax increase = $144/year
Actual Value = $300,000, tax increase = $173/year
Actual Value = $350,000, tax increase = $201/year
Apartment values vary widely, but a working number for an actual value might be $100,000/unit. So, that would come out to an increased in rent of $58/year or $4.80 a month. Commercial properties are taxed at a different rate than residential properties, and I can’t speak to those, but they are sure to include any increased taxes they have to pay in the cost of the goods and services that we buy from them.
For FLAT FEE ON PROPERTY UNITS, the numbers imply that there are 43,917 taxable dwelling units in the City (= $527,000 / $12 per year). To come up with the same $9.3 million in new annual revenue would mean having a flat annual fee of $211 a year (= $9,269,110 / 43,917) or $17.60 a month. A mansion in west Arvada would pay as much as a studio apartment in the Columbine neighborhood.
For FLAT FEE PER VEHICLE, to get the same amount, the fee would have to be $94 per vehicle per year (= 9,269,110 X 0.5 X 12 / 593,000). If you own three cars you, would pay $281 a year. The average Colorado family is said to own 2.7 vehicles.
For the FORT COLLINS MODEL, I have no idea what that would mean for Arvada. It’s been over a year since I checked their tax-information website and looked at their road maintenance fee. Frankly, I didn’t understand it then. I well remember that it took them a long time to enact one by a vote of their council, but I really don’t know how well they have spent their monies, how well it has been received by its citizens, or the logic behind their fee structure. Fort Collins is replacing their road fee with a sales tax increase this year.
So why do these alternative funding scenarios mean so much more out of pocket for Arvada residents than a simple sales tax increase? The answer to that goes back to the assumption that Arvada residents only make 54% of their purchases in the City. That number also implies that there is a lot of spending going on in Arvada by people who don’t live in Arvada. They are living in Jeffco, in Wheat Ridge, in Westminster, and in other metro-area cities. If the tax passes, Arvada will effectively be passing quite a bit of the tax burden onto those who live outside the City but decide to shop here.
It’s only then that the low $65-a-year estimate starts making sense. And, even though a sales tax is a regressive tax, it’s starting to look like a bargain for what we get. There is some equity in a sales tax proposal as well – at least as far as transportation and road repairs go. Many of the drivers going through Arvada, particularly on its arterials, are not Arvada residents. In addition to shoppers, we have those who make daily commutes through the City. In all the alternative funding scenarios the City lists, none (other than the sales tax increase) would burden those living outside the City of Arvada and who also use our roads to commute and shop.
MORE INFORMATION TO CONSIDER
State highways are not included in these improvement plans. Some of the most vexing arterials running through Arvada are not owned by the City. They are instead owned by the State of Colorado and the Colorado Department of Transportation (CDOT), who does the road maintenance and improvements for these routes. It’s possible for the City and CDOT to partner on projects on State highways – we did it on the railway underpass on the Wadsworth Bypass – but the process is very slow and cumbersome. For the most part, these new monies, if they happen at all, will not be going into maintaining these roads.
State routes include Sheridan Boulevard, Wadsworth Boulevard, Highway 93 running past the old Rocky Flats site, Coal Creek Canyon Road (State Highway 72), large parts of Ward Road, of 64th Avenue, and of Indiana Street. If you haven’t been paying attention to the State Highway signs on your commute to work, now is a good time to start noticing them.
Not all the possible funding options for transportation improvements are listed in the scenarios chart. For example, in the past, before the FASTER vehicle registration fees were enacted by the State Legislature, metro-area cities were considering using their ability to levy a sales tax on gasoline purchases to keep up road maintenance and improvements. But that kind of thing, and similar proposals, are difficult to do without a lot of cooperation from surrounding municipalities. Why buy gas in Arvada, when you know you can get it for five cents a gallon cheaper in Wheat Ridge?
Speaking of FASTER, some might be wondering why citizen approval is required for some funding scenarios and not for others. The variable FASTER fees, which average about $72 per vehicle per year, were passed without a vote of the people because the Legislature identified the revenues as fees rather than taxes. Like our 22-cents-a-gallon Colorado gas tax, the FASTER fees go into the State’s Highway Users Tax Fund (HUTF). The FASTER fees certainly helped the construction industry as we headed into the Great Recession in 2009, but it did little for those who were without work during the recession and who still had to register their cars and pay the new fees whether they drove their vehicles to work or not.
Colorado’s Taxpayer Bill of Rights (TABOR) generally requires that new taxes or bonded indebtedness have to first be voted on by the citizens. Fees levied for services, generally do not have to be voted on. But there is nothing in TABOR that prevents Arvada for asking for voter approval for any new road maintenance fees anyway.
The Colorado General Assembly doesn’t adjourn until May, and already under consideration in this session is increasing the sales or fuel taxes. Colorado hasn’t increased its gas tax in 22 years (since 1993). A measure to increase the fuel tax, or to increase the State’s 2.9% sales tax and use the increase for transportation purposes, may well show up on a November ballot referendum.
A State sales tax or fuel tax increase would be good for the City. Why? Because, after a small off-top-allocation to the Colorado State Patrol, the new revenues would be split about evenly between CDOT and local governments, such as Arvada. Currently, Arvada receives about $4 million a year from our State gas/diesel taxes and other fees. About $800 thousand of that comes from the FASTER fees in the HUTF. That amount would be bumped up by whatever new tax the voters decide to pass in a November statewide referendum – unless the Legislature decides to call it a fee instead of a tax. In that case, like FASTER, there will be no vote of the public on the increase, it will just happen.
[update] If you don’t think transportation issues in the Colorado General Assembly are confusing, have a look at this Arvada Press article on the subject posted last month. Here’s the link:
[end of update]
And the feds may weigh in as well. The US government hasn’t raised its 18.4 cents a gallon gas tax since 1993 either. No new federal gas tax will be passed by this Congress, but next year is indeed a possibility. But other than raising the price of gasoline, a federal tax is not likely to be allocated back to the states and local municipalities for routine road maintenance, since it never has been in the past. That money, if it materializes, is more likely to go to things like bridge reconstruction and rebuilding the intersection at Kipling and I-70 – all good things, but it won’t help fix potholes in Arvada.
DO ARVADANS REALLY WANT BETTER ROADS?
Of course they do! Congestion, potholes, long waits at traffic lights, long backups for accidents, potholes again, lost hubcaps, bumpy rides, west Arvada growth, back streets riddled with cracked pavements, uncleared snow on collector streets after a major storm, pavements so broken that they have to be completely rebuilt, backups at train crossings, dangerous intersections and pedestrian crossings – it’s a long list of miseries that the City of Arvada hears about on an almost daily basis.
The biennial citizens survey has shown an abrupt drop in satisfaction with the City’s road maintenance and repair and in efforts to manage congestion in the last two years. A recent citizens’ capital improvements committee review showed a strong preference for improving our roadway infrastructure. And a recent pavement condition survey and study predicts a dramatic drop in pavement conditions in coming years if maintenance efforts aren’t increased.
But the biennial citizen surveys are very subjective. And the public at large has never actually been asked how much they are willing to pay to improve Arvada’s roads, nor how much improvement they expect to see for what they pay.
Or do we want instead to cut back other City services, such as police, courts, parks, or administration to pay for better roads? And what would that mean for police patrols, for curtailing repeat offenders, for getting the parks mowed and broken sprinklers fixed, or increasing the wait times for permits and having poor code enforcement?
The short answer is that no one really knows what the public wants because we’ve never really asked them. Such questions as, “How much are you willing to pay for better roads?” or “What services are you willing to go without to get potholes filled faster?” have never been asked. I don’t know what the public’s answer to those questions would be, and I suspect that no one else knows either.
The way to find out, of course, is to put a tax issue on the ballot and get the real answer. But before that is done, it might be a very good idea to do some polls and have some community feedback sessions to get a sense of what Arvadans really want before we go to the ballot box to confirm what we think is right.
And that was the sense of at least some of the Council members at Monday night’s workshop on this subject. But some other members didn’t want to wait for a poll to come back, and instead advocated just going straight to the voters this November to ask if they wanted a half-percent sales tax increase or not. Instead of a poll, they wanted to see educational material sent out explaining what the problem was.
Without knowing what will come out of the State Legislature until May, and not knowing what the result of a statewide transportation vote might be, other Council members thought 2016 was too soon to be asking for increased taxes. One of the bills being worked on in the Legislature might give Arvada an additional $3.2 million to $3.9 million from the HUTF each year – about a third of what the City Staff says is needed.
On top of that, the November ballot is looking like it will be one of the longest and most contentious ballots in recent history. Generally, that is not a very good climate for asking people to increase their taxes, no matter how good the cause is.
The City Manager, Mark Deven, already has the authority to contract for polls or to send out informational material to gauge public response. My guess is that he will do a little of both and return to the Council with the first real idea of how a sales tax increase is likely to be received by Arvada’s voters.
WHERE TO FIND OUT MORE
You can watch the video of the Council’s Monday night workshop online. You can find it on the Arvada.org website in the Video Gallery at
or you can watch it on YouTube at
The part about financing roads starts at about the 25-minute mark on the video.
The Citizens for a Livable Ralston Community is an independent neighborhood association representing the neighborhoods adjacent to Ralston Road from the Wadsworth Bypass to the Kipling Parkway.
You can read all of our articles on our main website at http://www.RalstonCommunity.org or you can read even more posts on our Facebook page at “CLRC – Citizens for a Liveable Ralston Community”. You can write to us, call us or email us at
c/o John Kiljan, Secretary
6185 Field Street
Arvada, CO 80004
March 15, 2016