Colorado’s roads are broken, and they’re broken because the legislators in Denver would rather talk about fixing them than actually fix them.
Enter Proposition 109, Fix Our Damn Roads. It cuts the Gordian Knot of financing and budgeting, letting us repair and expand our inadequate highway and road system without raising taxes.
Our roads never get fixed because transportation comes last in the state’s budgeting priorities. Think of the budget as a series of cascading buckets. When one is filled, it overflows into the next one. By statute, the bucket labeled “Transportation” is at the bottom, and the big bucket labeled “General Fund” is in the middle. It’s almost impossible to fill the General Fund bucket, and little if any water ever makes it down to the Transportation bucket.
Proposition 109 forces road projects to the front of the line by issuing revenue anticipation notes (bonds) to fund that work. Since the very first bucket is always the one labeled “Debt Service,” the state legislature has to pay those bonds off first. Just like that, transportation moves from being the red-headed stepchild to being the favorite son.
Some fiscal conservatives worry about allowing the state to borrow more. Prop 109 authorizes the issuance of up to $3.5 billion in bonds, repayable over 20 years. But because the revenue replaces $1.5 billion in other revenue, the net debt would increase by $2 billion instead. By comparison, the state government already has roughly $25 billion in long-term liabilities.
It’s important to understand that Colorado doesn’t operate like the federal government, issuing debt that it never has to repay. Like most other states, Colorado has a balanced budget requirement, meaning that the debt has to be retired in 20 years.
What matters here isn’t the debt number, but the cash flow to service it. Legislative Council estimates that the annual debt service for the debt would run about $260 million a year. That is, legislators would have to spend $260 million on roads that they otherwise would have spent on something else instead. This, out of a total state budget of $30 billion, and growing.
That’s about three-quarters of one percent of total spending, and about the same as the taxpayer-funded bailout of PERA they passed last year.
Back in 2005, in the same vote that approved Referendum C, Coloradan rejected $2 billion in bonding for roads packaged as Referendum D. In large part, that vote failed because voters didn’t know where the money was going, and feared it would become a large slush fund for CDOT.
Prop 109 avoids these mistakes. The specific road projects are detailed in the proposition, so voters know exactly how it can be spent. And instead of being concentrated solely on the Front Range, they are spread around the state. Voters in Grand Junction and Montrose won’t be subsidizing commuter lanes for Denver.
In short, Prop 109 does the work that politicians won’t do. It sets priorities for our budget, does it without increasing taxes, and forces legislators to make the choices they should have been making all along.
Joshua Sharf is a fiscal policy analyst for the Independence Institute, a free market think tank in Denver. The Institute is the main backer of Prop 109.
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