New proposal would increase fees on gasoline, delivery, ride-share services and more

Colorado lawmakers propose new gas fee
Posted at 8:30 PM, Mar 19, 2021
and last updated 2021-03-19 22:45:24-04

DENVER — A newly unveiled transportation bill would raise fees on gasoline, delivery, ride-share and more.

The bill is set to be introduced in the Colorado legislature over the next few weeks, but a draft proposal is shedding light on what those fees would look like.

What would the fees include?

According to the draft legislation:

  • Starting in 2023, there would be a $.02 increase per gallon of gasoline. It would then increase by $.02 every two years until 2029, bringing the total to an $.08 per gallon fee.
  • Starting in 2023, diesel gasoline would see a $.06 increase. That fee would increase by $.01 increase every two years until 2029, bringing the total to an $.08 per gallon fee.
  • Online retail orders would see a $.25 fee on delivery.
  • Ride-share services would see a $.30 per trip fee or a $.15 fee for carpools.
  • Electric vehicles would experience a registration fee increase from $50 per year to $90 per year over the next decade.
  • Hybrid vehicles would see a registration fee increase to $27 per year over the next decade.

Taxis would see in undetermined flat fee increase, and there would be an increase on rental car fees by $2 per day as well.

In all, the draft estimates the changes would result in an extra $28 per Coloradan annually. However, bill co-sponsors say fixing the state’s infrastructure will result in long-term savings to drivers.

“On average, Coloradans are losing $732 a year on maintenance to their car and lost productivity sitting in congestion,” said Rep. Alec Garnett, the speaker of the house. “This is about catching up and making sure that we are putting safety first, productivity first and Colorado first.”

The bill would also include some short-term relief to drivers by lowering the state’s FASTER road safety surcharge by $90 million over the next two years. Those fees would then be restored to their normal levels starting in 2024.

If approved, the bill would result in roughly $4 billion in new fee revenue over the next 11 years to be used to help build, repair and maintain transportation infrastructure across the state.

The gas fee is expected to generate roughly $2 billion in the first decade, another $1.12 billion would come from the delivery fee and $203 million would come from the ride-share fee.

While the proposal does have some Republican support, the House and Senate minority leaders have openly opposed the idea of adding new fees on people and businesses who are already struggling during the pandemic.

“I think that Colorado families are being nickeled and dimed to death,” said Rep. Hugh McKean, the House minority leader.

While McKean said he has known that a transportation fee bill was in the works for a while, he has only started to learn the details of this proposal, and it’s much more than he was expecting.

“We knew there would be some fees, but we didn’t realize there would be an entire sheet of fees,” he said.

As a state, Colorado voters have not approved an increase to the gas tax since 1991. The tax currently sits at $.22 per gallon, which is the 10th lowest in the country.

“We have an estimated $9 billion in transportation needs in the state. That doesn’t include major projects like the Eisenhower Tunnel, I-70 or Front Range rail,” Sen. Faith Winter, D-Westminster, said. “This is a sustainable solution that’s going to raise $4 billion in the next 11 years, and it’s going to make sure we’re reducing congestion and getting people out of traffic.”

Winter says more drivers are on the road, increasing the wear and tear on the infrastructure. However, cars are becoming more fuel efficient, and more drivers are relying on hybrid or electric vehicles than in the past, meaning the state is seeing less funding.

Beyond that, supporters argue the cost of construction materials is increasing, making maintenance and new infrastructure projects more expensive overall.

While McKean agrees something needs to be done to address the state’s transportation funding needs, he doesn’t like the idea of the legislature forcing the issue without the support of voters.

Don’t new costs have to be approved by voters?

Yes and no. Under the Taxpayer Bill of Rights, otherwise known as TABOR, new taxes must be approved by voters first. TABOR has been in place since 1992.

However, the law has a specific exemption for fees. Fees are different than taxes because they are considered a voluntary payments for services that directly benefit the program they come from.

The bill’s co-sponsors say their proposal doesn’t fall under TABOR.

“All of the other packages that came before had to go to voters because they were tax increases. This is a creative approach that’s not a tax increase where we don’t have to go to voters,” Garnett said.

Others disagree and say this proposal is just a way to try to skirt around the voters.

“The people of Colorado know that it’s like, you call it a fee — you can call it whatever you want — but at the end of the day, they know that they're funding it and tell them it’s a tax,” said Jesse Mallory, the Colorado state director of Americans for Prosperity.

Mallory contends the true costs Coloradans will face as a result of this proposal is much higher since the price of goods and services is likely to be increased by businesses in order to cover the cost.

What about Proposition 117?

Proposition 117, which was approved in November, asked voters if they want to have the right to approve of the creation of new enterprises that are projected to collect $100 million or more in fees over the first five years.

However, it does not apply to current enterprises, such as FASTER. Bill co-sponsors say this proposal also does not fall under Prop. 117 because most of the money would go to current enterprises.

“There are three new enterprises that we are creating, but they all fall under the threshold of 117. So, we are abiding by the will of voters,” Garnett said. “All the lawyers we’ve worked with say it’s legal.”

Mallory disagrees; the way he sees it, the new transportation fee is just a creative way around the will of the voters.

“The legislature is making a conscious decision to tailor this in a way to use legal and legislative gymnastics to get around all these requirements in order to pursue this funding mechanism,” he said.

Americans for Prosperity conducted an online poll and says it found that the majority of people who participated opposed a new fee. Instead of this proposal, Mallory would like to see the state legislature prioritize more of the general fund money to addressing transportation needs.

Garnett countered by saying Americans for Prosperity is an out-of-state organization that doesn’t have the benefit of voters at the forefront of their agenda.

McKean also believes the new proposal is a tricky workaround from the new proposition that he doesn’t think constituents are going to like. He would like to go back to the ballot box with a more targeted question to see if voters would approve of a gas tax increase for specific projects. He would like to see that tax increase sunset after five years or so.

“I think the past efforts have been, ‘Look we haven’t increased the gas tax in X number of years. We should do that.’ Well, maybe we should, but the fact is that voters aren’t really interested in that part of the conversation. What they are interested in is what are you going to do with that when you get it, and how can I hold you accountable?” McKean said.

The Colorado Department of Transportation has not taken a position on the bill and has declined to comment on it.

However, Gov. Jared Polis has shown his early support for the bill, saying the state cannot afford to kick the can down the road any longer when it comes to transportation funding

"This proposal is a reasonable long-term solution to future-proof and ensure sustainable transportation funding in our state," a statement from the Governor read. "By embracing the market-driven transition that so many companies are making toward electric vehicles, this proposal will help us create a system that can meet the demands of the future and support an economy that works for everyone."

The bill is expected to be introduced sometime in the next few weeks. Denver7 will keep an eye on it as it makes its way through the legislative process.