November 27, 2022

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Colorado fees on most deliveries and ride-sharing will kick in July 1

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Soon, Colorado customers will notice an extra charge on their receipts for delivery orders through Amazon, UPS and DoorDash: 27 cents.

For most Uber and Lyft rides: 30 cents.

And for car-share rentals lasting at least 24 hours: $2.

A sea change in transportation funding is coming July 1, when several new fees approved by Colorado lawmakers more than a year ago will take effect. They will target more users of the state’s roads and highways, along with their customers, to chip in for major road and bridge projects — along with initiatives to reduce greenhouse gas emissions from tailpipes across the fast-growing state.

Colorado’s landmark $5.4 billion transportation legislation, 2021’s Senate Bill 260, aims to harness some of the new fee proceeds to support transit expansions and help speed the sometimes-challenging transition to electric vehicles for all drivers, from car owners to operators of large truck fleets. The new fees are projected to raise the bulk of the money from the legislation over the next decade — about $3.8 billion — with the rest coming from state budget transfers and stimulus dollars.

“It’s really exciting that the state of Colorado has funding available to support transit agencies and fleets and communities as they’re making this transition” to electric vehicles, said Kay Kelly, chief of innovative mobility for the Colorado Department of Transportation. “Because one of the identified barriers is: There are really high upfront costs, (even if) there are lower operation and maintenance costs.”

Gov. Jared Polis and other supporters have argued the new fee-heavy setup was necessary to modernize the state’s cash-strapped transportation system. But it comes with potential legal and political complications.

A pending lawsuit by conservative opponents is challenging the constitutionality of the fees, since they weren’t approved by voters. Also: The new fees, though small, will hit voters’ wallets in an election year.

As these fees kick in, no longer will Colorado rely so heavily on its eroding 22-cents-per-gallon gas tax, last increased in 1991.

For now, the most notable fees will be the wide-ranging one on retail delivery orders and the fee on transactions in ride-hailing apps, with the latter cut in half if the ride happens in a zero-emission vehicle.

But stay tuned: Gas fill-ups at the pump will cost just a little more starting early next year.

Also kicking in over the coming year will be higher annual vehicle registration fees for electric vehicles to help offset the lower gas taxes their owners pay. Those will start at an extra $3 for plug-in hybrids and $4 for full-electric vehicles. Each will ratchet up over the next decade to $27 (for hybrids) and $96 (for full EVs).

Cars, trucks and campers heading westbound ...

Helen H. Richardson, The Denver Post

Cars, trucks and campers heading westbound brake as they come into big curves while traveling down Floyd Hill along Interstate 70 on Oct. 4, 2021, near Idaho Springs. The stretch is part of an upcoming $700 million project to rebuild I-70, replacing bridges and smoothing the highway’s sharp curves into Clear Creek Canyon.

Will fees raise political stakes?

Though the fees and the programs they’ll support have plenty of backers, they’re sure to feature in some of this fall’s election campaigns.

An illustration of the political risk: Not all of the new fees will take effect in July as intended. Spooked by soaring gas prices, the Democratic-majority legislature and Polis this spring delayed a new 2-cent-per-gallon “road usage” fee on gasoline and diesel purchases — on top of existing fuel taxes — until April 1 next year.

That one fee is expected to raise the most revenue of any of the SB-260 fees, about $1.6 billion over a decade. The legislature is replacing the lost early revenue with general-fund money.

However, a separate fee on diesel, also set at 2 cents per gallon, will take effect next month on schedule. That one is based on heavy trucks’ impact on bridges and tunnels, and its proceeds will be earmarked for their repair and upgrade projects, including at the Eisenhower Tunnel.

“The fact that the governor and the legislature thought the gas fee was something that could be delayed right now — I think also the delivery and ride-share fees should have been at least delayed, too, given that those are things that add costs for everyday Coloradans,” said Michael Fields, president of the Advance Colorado Institute, a conservative think tank. “We are still adamant that this is something that should go to voters.”

Fields hopes voters in legislative districts with tight races, and perhaps the governor’s race, will get angry at the fees they’re going to be paying. Still, it’s hard to say in such a polarized age.

Fields is among the plaintiffs in the lawsuit, filed in April in Denver District Court. Also supported by Americans for Prosperity, it takes state lawmakers to task for designing a complex fee structure — charging the fees through four new state enterprises plus an existing one — to sidestep the state’s Taxpayer’s Bill of Rights. The state constitutional provision would require asking voters to raise taxes.

Fields and some other backers had attempted to thwart large fee-raising programs by winning voter approval for Proposition 117 in 2020. It requires asking voters to approve fees, too, if they’ll generate revenue above a certain threshold. Lawmakers attempted to work within its confines. The plaintiffs cry foul.

Ask Polis if he’s worried about election-year blowback, and he doesn’t flinch. He hopes voters will consider the whole picture.

“We wanted to really update the funding mix for roads and bridges to deal with the changing nature of road usage,” Polis said in an interview. “Because we looked at the projections for what was happening — effectively, more miles driven (and) less money for the roads was a bad formula for Colorado.”

Polis noted the transportation bill received bipartisan support across the state, despite winning just one Republican vote inside the State Capitol, from Sen. Kevin Priola of Henderson.

Once all fees take effect next year, the impact will vary widely. Bill sponsors said their analysis showed the average consumer in the first full year would pay about $28 extra, a figure that will rise as the fees rise with inflation or on set schedules. The gas fee will rise to 8 cents per gallon by mid-2028.

The bill wasn’t entirely about hiking fees. Polis also pushed for temporary relief from vehicle registration fees for all motorists, and Colorado’s annual registration fees, which are high compared to many states, dropped by $11.10 this year and next year.

“So it depends on people’s usage” of affected services, Polis said. “Again, if you own two or three cars and you’re saving $30, $40 on your vehicle registration fees — you know, if half of that goes back through deliveries, you’re still saving money.”

Technicians work on electric vehicles in ...

Helen H. Richardson, The Denver Post

Technicians work on electric vehicles in the vehicle assembly shop at Lightning eMotors in Loveland on May 4, 2021. Technology that has matured for passenger cars is advancing quickly for medium- and heavy-duty vehicles.

State’s plans begin taking shape

State officials in CDOT, the Colorado Department of Public Health and Environment, and the Colorado Energy Office have spent recent months setting up the four new enterprises, including convening new boards to oversee them.

Three are focused on different aspects of supporting electric vehicle adoption and charging infrastructure, and one will focus on pollution-reduction strategies for metro Denver and the northern Front Range. A fifth enterprise, CDOT’s long-standing Bridge and Tunnel Enterprise, has been expanded to add upkeep of highway tunnels to its mission.

All have formally adopted the fees authorized by SB-260. They’ve also worked out 10-year plans that shed light on how they’ll begin spending the fee collections as they roll in.

“The goal of all these enterprises is really to reduce and mitigate adverse greenhouse gas and environmental and health impacts on people,” said Kelly, CDOT’s innovative mobility chief. “And the enterprises are giving us funding to help transition our transportation sector to cleaner technologies.”

The delayed gas fees will go most directly to road projects at the state and local levels, along with “multimodal” initiatives that support transit and other alternatives to driving. Other fees — especially the delivery fee and the ride-hailing fee — will go predominantly to the enterprises for more specific purposes.

Under SB-260, the state estimates the following enterprise fee allocations in the first decade:

  • $134 million will go to the smallest enterprise, called the Clean Transit Enterprise. It’s aimed at helping public transit agencies across the state establish plans and upgrade their buses to electric vehicles, including dealing with the costs and charging needs.
  • $172 million will go to the Clean Fleet Enterprise, charged with helping owners and operators of vehicle fleets upgrade to electric vehicles or, in the short term, cleaner-burning fuels. Initially, it will focus on issuing grants, according to its plan. It also could help Uber and Lyft drivers buy or lease zero-emission vehicles.
  • $184 million will go to the Nonattainment Area Air Pollution Mitigation Enterprise, which also is set to receive $50 million in state funding. This enterprise has perhaps the broadest mandate: to support projects that reduce pollution and road construction health impacts in a nine-county area from metro Denver to Greeley and Fort Collins that exceeds federal ozone limits. That likely will include financial support of transit expansion projects, such as building bus-rapid transit corridors.
  • $310 million will go to the Community Access Enterprise. Its mission is to support the adoption of electric vehicles by the general public, especially aiding low- and moderate-income people, and to help expand the network of charging stations. It also is considering an electric bike program.
  • $523 million to the Bridge and Tunnel Enterprise for projects building and repairing those components of the highway system.
Moksha Efsea unplugs his electric car ...

Michael Ciaglo, Special to the Denver Post

Moksha Efsea unplugs his electric car from an EVgo Fast Charging station after recharging his battery outside the REI on Platte Street in Denver on Dec. 6, 2018.

“Clearly the incentives are extremely important”

One challenge facing the electric vehicle-focused enterprises is that though the technology at play is maturing for passenger cars, pickup trucks and sport-utility vehicles, it’s still got a long way to go for heavy-duty trucks.

“Clearly the incentives are extremely important because you need to offset that cost differential,” said Greg Fulton, the president of the Colorado Motor Carriers Association and a member of the Clean Fleet Enterprise’s board.

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