Denver Region Comes Closer to Endorsing Sales Tax Increase for Transit

» Proposal would make the ballot this November for required voter approval.

Voters in Denver passed a transit expansion program called FasTracks back in 2004, funded by a 0.4% sales tax. The region was promised an extensive network of light rail, commuter rail, and bus rapid lines by 2017. That project, however, has become increasingly unlikely as construction costs have increased and estimated sales tax returns have fallen dramatically. In 2004, the program was expected to cost a total of $4.7 billion, while it’s now estimated at $6.9 billion; meanwhile, the estimated sales tax income for the period between 2005 and 2035 has decreased from $13.7 billion in 2004 to $9.4 billion today.

The result: an important shortfall. FasTracks is only expected to garner $4.7 billion in funds by 2017, leaving a $2.2 billion gap that must be funded by some other means. Otherwise, doomsday: many of the projected lines will have to be cut in size. I reported in January that the Regional Transit District was considering proposing an increase in the sales tax to cover the gap; that idea now seems more certain.

As the Denver Post reports, that’s because the Metro Mayors Caucus, a group of 38 of the area’s mayors, has endorsed the idea of placing the tax increase on the ballot. The proposal would double the sales tax to 0.8%; based on current estimates that would provide enough revenue to complete the program. Denver mayor John Hickenlooper “Questioned whether a successful campaign can be put together in the current tough economic climate to get voter approval for a tax increase this November,” a valid concern. But the other members of the board, concerned that their individual part of the region might have its transit service delayed, wanted to ensure that the tax increase was considered this year.

There are a lot of problems with regional cooperation when it comes to transit; I described a few in Charlotte last month. Notably, as revenues decline, projects that extend across the maximum number of municipalities can sometimes be prioritized over those that would benefit the most number of transit riders in the center city alone.

But Denver’s case – the rapid push for a sales tax increase described here – demonstrates an advantage of such regional cooperation. If most of the cities in a region agree on a strong program for regional expansion, and if each is equally adamant that their section of the region get service as soon as possible, transit projects will advance more quickly. If there weren’t an impetus from all sides of the Denver metro area to push for transit expansion, it seems unlikely that we’d be discussing a sales tax increase today.

Denver Transit

3 replies on “Denver Region Comes Closer to Endorsing Sales Tax Increase for Transit”

It’d be a miracle if this passes. The every-man-for-himself crowd around here howls about taxes in the best of times. And the RTD is not well-liked. At best they seem incompetent and are portrayed by the anti-tax nimbys as corrupt. Despite the obvious need for better transit options and planning, I’m not convinced the RTD can convince us to spend the money.

The drop in sales tax returns isn’t the main problem. The main problem is that RTD were downright amateur with their future tax revenue projections. It’s not that we got hit with a big recession instead of a small one that’s causing the problem. RTD didn’t take account any recessions. More so, they assumed sales tax revenue increases going forward would match the huge increases Denver saw in the 80s and 90s when the area boomed and added a button ton of good, high paying jobs.

In fact, their forecasts were so far off they couldn’t even pay for the project today even if it cost the $4.7 billion they originally claimed it would.

Add that along with John’s spot-on comments above and it’s hard to see how RTD’s going to manage to get a tax increase just to deliver what they already promised they could with the last one.

Press release this month confirms RTD will not seek the 0.4% increase this year (2010) because of the state of the economy, but adds: ‘If RTD does not secure additional revenues, current estimates indicate that the entire
FasTracks system will not be completed until 2042.’

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