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

Denver Light Rail

Denver FasTracks: New Sales Tax or Delayed Lines

Denver FasTracks, facing huge budget deficit, may see new dedicated funding streamDenver FasTracks Map

Denver’s RTD is currently pursuing one of the most ambitious transit expansion programs in the country: FasTracks, which will add 119 miles of light rail (three lines), commuter rail (three lines), and bus rapid transit (one line), all centering around downtown’s Union Station. FasTracks is being sponsored by a region-wide sales tax as well as federal new start program dollars. Just last month, RTD was awarded $308 million from the federal government for the 12.1-mile West Corridor LRT line to be built between downtown and Jefferson County.

But escalating construction costs and declining revenue are putting the program’s completion in danger. The project’s originally price tag – projected in 2004 – was $4.7 billion, but that number has now zoomed up to $7.9 billion, and sales tax revenues have declined with the suffering economy. The Rocky Mountain News reported last week that RTD is now projecting that it will be $2.1 billion short of its total needs by the project’s end date, which means that either the transit agency will have to delay some of the projects (to 2034!) or cancel some of the lines entirely.

And yet RTD may have an alternative: finding another funding source. A poll taken by the agency suggests that 63% of Denver-area citizens would support a sales tax hike of up to 0.4% (4¢ for a $10 purchase) in order to ensure the completion of the entire project. Now RTD is considering whether to place a referendum on the ballot in the eight-county transit area this fall or next, hoping to convince citizens of the need for more money to pay for transit.

The good news for RTD is that 77% of people in the metro have positive impressions of the program, while only 19% think of it negatively. The bad news is that the worsening economy may make it difficult for RTD to get the support of anxious voters.

At this point, RTD – like many transit agencies around the country – has no choice but to ask voters to pay more to support it. Ultimately, communities that choose to invest in large transit expansions have no real recourse but asking their own citizens to pay more of the cost – which seems “fair,” at least in a national context in which the vast majority of communities are not investing in transit expansion. In the long term, it would probably make more sense to allow communities to divert highway funds to transit investment, but for now, the best alternative is local taxation.

Fortunately for cities like Denver (and Charlotte, Dallas, Houston…), the people seem happy to vote to pay a small sales tax to support such projects. One wonders, then, why more communities don’t propose referenda to pay for transit expansion?

Images above: RTD LRT Train and FasTracks 2017 Map, from RTD