Tax or Just Spend? Colorado Ballot Box Fight Echoes U.S. Divide

(Bloomberg) -- The national debate on infrastructure funding has come to a head in Colorado, where voters are considering two clashing measures on the November ballot that propose record bond sales for much-needed road repairs in a state struggling to keep up with its rapid growth.

The key questions underlying the two measures, propositions 109 and 110, are whether the state should raise taxes or use existing revenues to pay for billions of dollars in transportation projects and whether some of the money should be spent on public transit.

Proposition 109, known as "Fix Our Damn Roads," would authorize Colorado to sell up to $3.5 billion in bonds without raising taxes to fund 66 road, bridge, and tunnel projects. Proposition 110, known as "Let’s Go Colorado" would prompt the state to sell up to $6 billion in bonds, raise sales taxes from 2.9 percent to 3.52 percent for 20 years, and allocate 15 percent of new revenue toward public transit, including light rail and biking projects.

State law dictates that if both pass, the measure with the most yes votes supersedes any point of conflict with the other measure, such as how much to borrow, how to pay for it and how to spend the money. If neither passes, a law approved this year requires another bond measure, for $2.3 billion, go to voters in November 2019.

The Centennial State hasn’t approved a bond measure for transportation in almost two decades, when a $1.7 billion bond was passed in 1999. Voters rejected a $2 billion measure in 2005. If either of the competing initiatives passes, it would be the biggest municipal bond approval in the state’s history.

Right Plan?

On one side of the debate are rural, more conservative bond supporters who say the state should use money from the budget to back bonds and spend proceeds only on fixing roads and bridges.

"Quite frankly, most folks here don’t really care if light rail or bus or bike paths are available," said Debbie Bell, a commissioner in Fremont County, an area with less than 50,000 people and home to several prisons. "Most citizens believe there is no rural need for multimodal transportation."

On the other side are business interests and government officials in population centers who say fixing transportation is more than just paving roads and filling potholes.

Proposition 110 and raising taxes make fiscal sense, argued Kelly Brough, president and chief executive of the Denver Chamber of Commerce. The burden of paying a sales tax would also be shared by visitors and tourists, Brough argued, easing the load on residents.

"It’s less expensive if we do this right and have a funding stream that the market can count on," Brough said.

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