Ciruli Associates - Colorado Politics - Polls - Research

Economy a stumbling block for RTD

Speakout
Rocky Mountain News
Feb. 13, 2009
By Floyd Ciruli

ThBuoyed by reports of public support, the Regional Transportation District (RTD) is said to be considering going back to the ballot for another tax hike for funds to complete the stalled FasTracks. However, there are good reasons to believe this time voters might say to RTD, ‘not so fast.’ It was just in 2004 that voters generously approved a hefty sales tax hike to support the ambitious build-out of light rail. But mounting costs have crippled the plan and now RTD is looking for salvation at the ballot box.

The public has supported adding transit to the metro transportation mix and the light rail lines completed so far have proved popular. But, public support for transportation in theory might not translate to the reality of another tax hike.

Although polls often show public willingness to raise sales taxes, a smart opposition campaign will challenge RTD management’s credibility to deliver a rail program, even with millions more. RTD’s track record hasn’t been seriously challenged and it is vulnerable to the charge of over-promising in the 2004 election and under-delivering since. In RTD-sponsored polls, the few questions that have even gently raised doubt about RTD’s credibility have lowered support for the agency by 15 percent or more.

Critics of RTD charge that the entire FasTracks planning process was dictated by agency and regional politics. The amount of the tax increase, four-tenths of a cent ($120 million per year), was determined by polling and a political judgment as to what voters and powerful stakeholders would tolerate. Then it was decided that each county would receive a rail line because the regional coalition would collapse without it (south Arapahoe County was excluded because it had the T-REX and Littleton lines). This was done with knowledge that some lines would cost substantially more than others regardless of ridership. The available funds (using optimistic projections of sales tax revenue) were then divided into low-ball estimates of land purchases and construction costs. Voilà, a happy campaign was born.

A smart campaign sold the plan to voters, but after it passed, the construction cost projections became unrealistic to even RTD. While the estimates were recognized as unrealistic as early as 2005, the problem was exacerbated by commodity inflation in 2007 and 2008. Of course, the knock-out blow was the collapse of sales tax revenue due to the recession in late 2008.

Many factors make a tax increase today a risky proposition and suggest a need for an alternative solution.

Voters are reluctant to raise taxes when their incomes are declining and jobs are endangered. They said no to a host of state and local tax initiatives last fall just as the economy began its free fall. Today, things are much worse, and most knowledgeable observers believe it will continue to decline throughout 2009.
More importantly, a tax increase in this recessionary period will have a negative economic impact. For each tenth-of-a-cent sales tax increase requested, approximately $40 million would be withdrawn from the retail and general economy and moved into government coffers – not to be spent until 2012 or later. And, while RTD needs at least $80 million a year more, it is apparently proposing a $120 million a year increase, doubling its 2004 FasTracks tax revenue.
Voters raised RTD’s tax level and revenue 66 percent in 2004. Now, the district is promoting another 40 percent increase. Its projections were off by 36 percent, or $2.1 billion short of the $7.9 billion it now claims to need. Without some change in management and an independent agency review, any campaigning for an increased sales tax would be heavily burdened by RTD’s poor reputation for accurate projections.

What the public made clear by its voting and polling responses is that it wants the program it was promised, and it wants it sooner than later. The smart move for RTD would move the “shovel ready” projects forward and not request more money now.

If a regional sales tax increase is required, it should not be contemplated until beyond 2010 when the recession abates, and if a four-tenths of a cent increase is proposed, it should be dedicated equally to transit and highways. The multi-billion dollar investment of funds to transit at the same time that highway funding is being scuttled by the recession is creating a distortion between real on-the-ground transportation needs (automobiles and trucks will continue to make up 85% of the metro area’s transportation system’s trips) and funding, a distortion which will continue into the next decade.

Polling and recent elections show that metro voters are supportive of local highway transportation funding strategies. For example, Adams and Douglas counties have recently had successful sales tax extension elections for roads and transportation improvements, and improving transportation infrastructure was one of the elements in Denver’s successful 2006 bond package.

This alternative funding plan would have the benefit of employing sound macro economic policy (i.e., not raising taxes during a recession), and striking a balance between needed highway and transit funding and good politics.