By: State Rep. Mark Larson

Serious issues remain with the passage and signing of HB01-1267, the transportation funding bill. This bill, sponsored primarily by the Joint Budget Committee members with the backing of the Governor and the Colorado Department of Transportation, was rushed through the legislature in an attempt to maintain the tight time frames for hitting the bond markets and the selling of TRANS (Transportation Revenue Anticipation NoteS). In order for the state highway corridor projects to continue, including our own Highways 550 and 160 projects, this funding had to be secured or the projects would be delayed one year.

HB01-1267 was necessary because of the one time impacts to SB97-1 transfers brought about by Amendment 23. Readers will recall that SB97-1 provides that 10 percent of all sales and use tax revenues be transferred into the Highway Users Trust Fund (HUTF) to be spent on highway projects based on the assumption that at least 10 percent of all sales and use taxes are generated from highway and transportation related item sales, such as automobiles, tires, batteries, etc. These SB97-1 funds are used to provide the base funding necessary to obligate the TRANS bonds for the corridor projects. Since Amendment 23 funding comes from the same revenue source as the SB97-1 transfers and since TABOR refunds are paid out of the revenues from the year following the year the excess was generated, SB97-1 transfers were eliminated for a one year period. Once the one time hit of Amendment 23's impact is absorbed into the TABOR refund and the budget, future year funding for SB97-1 transfers will again be available. HB01-1267 allows the one time spending of money from the Controlled Maintenance Trust Fund (CMTF) to make up the shortfall in SB97-1 transfers caused by Amendment 23. Utilization of the CMTF will allow the TRANS bonding to continue and the corridor projects to continue as scheduled.

Now, here is where it gets a little complicated. The Controlled Maintenance Trust Fund also doubles as the three percent statutory budget reserve. Allowing this money to be spent is authorized in the law but will have to be repaid to the CMTF next year ... all of it. When repaid, that money will come from the same pool of money that funds capital construction projects for higher education, prisons, state buildings, the mental hospital system and some transportation. One might ask, if the CMTF money will have to be paid back next year out of the capital construction funding, why not just go ahead and take the money out of the capital construction funding this year? Good question. The reason is that capital construction projects are funded in phases over from two to four years. If the legislature took the money necessary to continue the highway projects out of capital construction instead of the CMTF, then all of the continuation projects (those funded in phases) could not be completed or would be delayed one year. Naturally, this is not acceptable.

So, we borrowed money from the Controlled Maintenance Trust Fund (which also serves as the statutory reserve) to replace the shortfall caused by Amendment 23 in the SB97-1 transfers that are used to provide the base for Transportation Revenue Anticipated Notes (TRANS) so that the corridor projects can continue as scheduled. And, we agreed that we would pay back the CMTF in full next year.

Well folks, that's the problem.... and why I voted against this risky bill. There are genuine and serious reasons we should not have gone this route. First, the Governor's Office of State Policy and Budget is projecting a $64 million shortfall in revenue projections for this year.

That means that the state will have less money in the "excess general fund reserves" or the pool of money available for capital construction projects. If we are to repay all of the borrowed money from the CMTF next year, that will mean we will have zero dollars available in the capital construction fund for projects above the continuation projects. That's right, zero. While we will able to finish continuation projects, there are other ramifications of the "excess general fund reserve" going to zero.

The last piece of this complicated puzzle is that all law suits against the state, when settled, are paid out of the "excess general fund reserve" or capital construction revenue. We have been informed by our attorneys that Colorado will likely have to settle on one of the larger lawsuit this year. The amount of this settlement ranges from $100 to $200 million. If law suit settlements are paid out of the "excess general fund reserve" and, if repayment to the CMTF will leave a zero balance in the "excess general fund reserve", then just where the heck will the money come from to pay this lawsuit? The answer is that capital projects will all stop until the fund is allowed to rebuild with future revenue surpluses.

So, as you can see, the choice was whether we delay the highway projects one year and not place existing capital construction projects at risk, or pass this very controversial bill that has several potential pitfalls attached. I voted "No".