By Leslie Jorgensen
THE COLORADO STATESMAN
Colorado’s 100 legislators have vowed to hammer out a bipartisan solution to the state budget’s $600 million shortfall. And true to their vows, members voiced bipartisan criticism when Republican leaders floated a quick-cash plan to infuse $500 million into the state coffers for improvements to highways and bridges.
Senate Minority Leader Josh Penry, of Fruita, and House Minority leader Mike May, of Parker, apparently couldn’t wait to announce their fundraising idea: selling equity in state buildings by issuing certificates of participation to generate millions for transportation infrastructure
However, in their rush to hold a press conference to unveil the idea, the duo neglected to tell their fellow Republicans what they were up to.
“Let’s not use a bad economy as an excuse for continuing to treat our roads and bridges as a second-class budget priority,” said Penry in a speech to newly sworn-in senators as he called on them to support the certificate of participation (COP) plan.
Pushing the repair and reconstruction of bridges and roads to the top of the state budget’s priority list is a popular idea among legislators. But the use of COPs as a funding mechanism sparked criticism from Democratic Gov. Bill Ritter, who called it “irresponsible,” and from legislators on both sides of the political aisle.
Penry declared the COPs are a “tried, tested and true” approach for underwriting capital projects in Colorado and several other states. In this case, he said, the road and bridge work also will create badly needed jobs.
“We believe very strongly that the state of Colorado should leverage all of the assets it has to invest in new
Perhaps no one was more shocked than Rep. Kent Lambert, R-Colorado Springs, who was named chairman of the newly created House minority’s task force to assess the state budget crisis and propose solutions.
“Due to the current state of the economy, we will have a lot of challenging decisions to make in the Legislature this year,” said May, announcing the formation of the budget task force during a Jan. 6 caucus meeting.
Besides Lambert, Republican members of the committee are Rep. Don Marostica, of Loveland, who serves on the Joint Budget Committee; minority whip Cory Gardner, of Yuma, and Rep. Ellen Roberts, of Durango.
“The task force will empower us to make informed, reasonable and responsible decisions in the face of these challenges,” May had said.
Hearing of May and Penry’s plan to sell COPs, Lambert felt anything but “informed.”
“They didn’t coordinate this with our caucus,” said Lambert, adding that he wasn’t the only GOP legislator who was upset that the minority leaders hadn’t discussed the funding proposal with them.
Worse, Lambert said, it had been portrayed as a “Republican” proposal.
“Raising money through a certificate of participation is the creation of debt by a different name,” he said.
“If it looks like a debt, quacks like a debt, walks like a debt — it’s a debt!” proclaimed Lambert, who is adamantly opposed to allowing Colorado to join the federal government in a debt-overload crisis.
“COPs will result in incurring more debt and will only serve to extend our economic downturn,” he predicted.
COPs are a fundraising alternative to selling bonds, but, unlike bonds, the certificates don’t require voter approval. Penry maintains the method is legal, sound and constitutional.
The Colorado Springs legislator remembers that the use of COPs infuriated many voters in El Paso County. In 2002, more than 66 percent of the voters rejected a ballot measure to fund the expansion of the criminal justice center and jail. Undeterred, the county government bypassed the voters and issued COPs to fund the $38 million project.
“Conventional funding sources for transportation have dried up as state revenue has taken a nosedive,” said Penry, who campaigned last year for the passage of Amendment 52 to fund road and bridge improvements without increasing taxes. Voters rejected the ballot initiative.
“We cannot afford to wait. We have to try a different approach — one that’s innovative, realistic and gets the job started immediately.”
He and May believe the use of COPs will generate funds, be a faster means of raising money and will be fairer to taxpayers than implementing or raising fees and taxes, as Democratic lawmakers promote. The GOP leaders hope to pass the COPs bill by Feb. 2.
Penry and May said the state cannot afford to wait for the federal government’s reported financial assistance to the states because no one knows when the state would receive assistance, the amount or what projects will be designated for funding.
“By leveraging a small portion of the billions in equity (that) Colorado has in its state buildings, and dedicating a fraction of the state’s General Fund and severance tax collections, the
state of Colorado can quickly and conservatively put more than half a billion dollars and thousands of Coloradans to work fixing unsafe bridges,” Penry said.
Not so fast, say the skeptics.
“We have this irrational spending spree of bailouts at the federal level — it’s like criminals broke into the mint and started printing money with nothing to back it up,” Lambert said.
“I’m against any federal bailout to the states,” he said. “Bailouts are stealing the people’s money. I won’t compromise my principles!”
Rep. Larry Liston, R-Colorado Springs, said he is willing to consider various fundraising proposals.
“Everything should be put on the table,” said Liston. “However, we’ve got to be very judicious and cautious in the use of COPs.”
Liston’s smorgasbord of budget solutions for consideration won’t include repealing or amending TABOR, the “Taxpayers Bill of Rights” constitutional amendment passed by voters in 1992.
People who blame the budget problems on TABOR, he said, are wrong.
“The problem is a loss of revenue, which has nothing to do with TABOR,” Liston declared. “In fact, if it weren’t for TABOR, we’d be making bigger budget cuts now.”
Ritter’s spokesman, Evan Dreyer, commended the Republicans for generating “creative ideas” — but said the COPs can’t be repaid without a
“Without that, this proposal is akin to subprime lending,” Dreyer told The Colorado Statesman. “Putting up state assets or buildings to support bonds or COPs — without a clearly identified revenue stream to pay back those bonds — seems irresponsible. This is a time to be fiscally conservative — not reckless.”
When the Legislature has to cut more than a half-billion dollars from the state budget, he said, it’s difficult to see where Penry and May would find the money to repay the COPs.
“This is just craziness!” asserted Sen. Chris Romer, D-Denver, equating the use of COPs to a “credit card strategy.”
Republicans and Democrats don’t disagree on the need to improve roads and bridges. According to Penry, 127 bridges are in dire need of repair.
In October 2008, Ritter’s blue-ribbon transportation commission — the Colorado Transportation Finance and Implementation Panel — reported that 122 of 3,754 on-system bridges need major rehabilitation or reconstruction. Of those bridges, 115 were built 75 or more years ago.
The commission also reported that 40 percent of the state’s 9,156-mile highway system is in poor condition, and 20 percent of it requires new construction.
Recommended funding sources and anticipated annual revenue include :
• Implementing a “State Highway Maintenance Fee” for roughly 5 million registered vehicles, to generate $500 million;
• Increasing excise taxes on motor fuels, to generate an estimated $22 million per-penny of the tax;
• Charging a “visitor fee” for car rental and lodging, to gain roughly $240 million;
• Adding 0.1 percent to the state sales taxes on retail goods, to generate about $89 million; and
• Increasing the severance tax by 1.7 percent, to produce $96 million.
Legislators also may consider bills to increase fees on vehicle registration, license plates and emissions, and to increase the state’s gas tax. The state’s 22-cents-per-gallon gas tax has remained unchanged
Several Republicans said they would oppose any increase in fees and taxes because it would hurt Coloradans who are already struggling to pay bills — both those who have lost their job and others who fear they will. The fee and tax increases, they said, would slow — not stimulate — the economy.
The report concluded that tax increases would require voter approval, whereas fees could be implemented by the state Legislature.