How Denver’s Public Transportation Projects Do (and Don’t) Get Funded

If you’ve ever had your car suspension redone after running over too many potholes; if you’ve waited for a bus delayed by traffic; if you’ve ever idled while waiting for congestion to clear near the Central 70 project; or if you’ve been waiting for more than a decade to take a train from Denver to Boulder, you’ve probably gathered that transportation projects in the metro area are complicated.

But funding those projects is, perhaps, even more challenging—especially when agencies find themselves burdened by debt from past projects that still aren’t done (we’re looking at you, FasTracks) and voters reject tax measures to pay for it all. Add in the unknown impact that COVID-19 will have on funding sources, and it’s easy to imagine more bumpy roads ahead (pun intended). Here’s a primer to make sense of it all.

So, Who’s Responsible for What?

If you’re trying to find out who’s to blame for that massive pothole on your morning commute, you came to the right place. In the Mile High City, the Department of Transportation and Infrastructure (DOTI) is responsible for the right of way, meaning that it fills those potholes, plows streets after snowstorms, and handles parking enforcement. Denver voted to create this stand-alone agency, which was previously the Department of Public Works, in the 2019 municipal election.

Meanwhile, the Colorado Department of Transportation (CDOT) manages all state roads in the city, and there are plenty (think: Colfax Avenue, Alameda Avenue, Federal Boulevard, I-25, and I-70). CDOT’s Region 1—there are five regions total—covers the eight-county metro area and works with dozens of local agencies. Within the city, DOTI maintains all state road traffic signals, but CDOT operates the 376 traffic signals on state roads in the rest of Region 1. CDOT also operates the Bustang and Snowstang transit services, which connect the metro to the high country, offerings it plans to expand south along I-25 over the next four years.

While DOTI and CDOT patch the pavement and engineer intersections, the Regional Transportation District (RTD) focuses on wheels and rails by running bus, light rail, and commuter rail lines. Governed by a publicly elected 15-member Board of Directors, this public transit agency serves the eight-county metro area and also builds and operates Park-N-Ride stations.

Who Funds the Acronyms, er, Agencies?

Federal and state funds flow to CDOT, which then funnels cash to metropolitan planning organizations like the Denver Regional Council of Governments (DRCOG; pronounced “Dr. Cog”), which covers 10 counties and distributes funds to local transportation projects. DOTI, RTD, and other local governments are often recipients of those federal funds.

On the state level, Colorado’s Highway Users Tax Fund goes to CDOT. The fund is created largely by surcharges on things like car registration fees (aka, FASTER funds) and a gas tax of 22 cents per gallon (an amount that hasn’t been raised since 1991). FASTER funding—a variety of fees, fines, and surcharges—is designated for bridge and transportation safety projects, as well as general transit improvements, but some funds are typically allocated to RTD for system upgrades, though this isn’t mandated.

CDOT also generates toll revenue, which is usually earmarked for specific projects; about two-thirds of the $300 million C-470 project is generated from tolls. Recent transfers from the state’s general fund through legislative action have bumped the agency’s normal $1.4 billion annual budget up to about $2 billion for 2020. Most of that additional funding is being used for interstate projects, such as the I-25 South Gap project.

That Seems Complicated…

There’s more: Denver’s DOTI is partly funded by Capital Improvement Program money—local, annual funds allocated to various city agencies by the City and County of Denver—and approximately $50 million in bonds that are dedicated to transportation needs. It also seeks private and public grants for projects.

Finally, RTD receives Federal Transit Administration funds (based on ridership, miles of track, and other factors) and grant money. There are some miscellaneous funds from advertising, small grants from DRCOG, voluntary state funds via CDOT (there is no state funding officially designated for RTD); fare revenue covers about 14 percent of the agency’s budget. But RTD’s primary funding source is the one percent sales-and-use tax levied within the district’s boundaries. That one percent has two parts: 0.6 percent supports RTD’s base system and 0.4 percent is reserved for FasTracks.

Wait, What’s FasTracks Again?

The FasTracks tax was added in 2004, when voters approved the multimodal project, which aims to add 122 miles of commuter rail and light rail, 18 miles of bus rapid transit services, and 57 new transit stations in the metro area. Four of nine FasTracks corridors are still unfinished, and Heather McKillop, CFO of RTD, says even if the agency had adequate funding to complete those corridors, it wouldn’t have the funding to operate them.

What Makes FasTracks and Other Projects So Expensive?

Before CDOT, DOTI, and RTD can wink at new projects, they have to make sure current systems are covered and existing debt is being repaid. After operations and maintenance expenses each year, officials say CDOT has about $60 million left for capital projects. New projects tend to be in the range of a hundred million dollars. “We’re very aware of what we need to fix,” says Paul Jesaitis, CDOT’s Region 1 transportation director. “We just don’t have the funding to implement that plan.”

So, When Projects Actually Get Funded, How Does That Work?

Every new project is paid for by a hodgepodge of funding sources—and some projects are carried out by a hodgepodge of agencies. Take, for instance, the Flatiron Flyer, the bus rapid transit service that runs along US 36. RTD, which runs the buses, funded improvements to HOV (high-occupancy vehicle) lanes, as well as the construction and installation of bus lanes, signals, and Park-N-Rides, while CDOT handled the toll lanes and civil engineering. Both agencies sent personnel to Washington, D.C., to pursue federal funding for the project. “Back 20, 30 years ago, when I started in transportation, we could get one pot of federal dollars that covered 80 percent of your project,” says McKillop. “That doesn’t happen anymore.”

Some RTD projects like FasTracks, she says, have five or six funding sources. Others have even more. Agencies team up when projects overlap to stretch funds further, but many funds are legally designated to be spent in specific ways so it’s not as simple as pooling cash. While entities like DRCOG assign designated funds to the appropriate projects, project sponsors—who take those funds and pool them with other pots of money—must ensure that every dollar is spent where it’s legally required to be spent. “In the end, most of us are dealing with taxpayer money,” says McKillop. “It’s just, what pocket of the taxes is it coming from?”

Speaking of Taxes…What’s the Deal with Those Tax Initiatives that Voters Turned Down Recently?

Over the last few years, Coloradans have repeatedly voted down tax funding for transportation, while Denver voters have shown support for the same measures to no avail. Most recently, last November, Proposition CC, which would have let the state keep any tax revenues above the state spending cap, was rejected by about 54 percent of Colorado voters (the measure won the support of 66 percent of Denver voters). Had it passed, a large portion of an estimated $116 million of the retained funds would have been transferred to CDOT via Colorado’s Highway Users Tax Fund.

Is That Everything?

That was a lot, we know. And the truth is, that’s not everything. RTD has significant debt—about $3.4 billion—and the COVID-19 pandemic will have a long-term impact on funding. RTD had already cut services before it suspended fare collection when the coronavirus outbreak hit. Sales and gas tax revenues have dropped and will impact budgets at the state and local levels. At this point, RTD and other agencies expect to receive stimulus aid from the federal government, but the federal bill that defines DRCOG’s funding is up for reconsideration this fall; who knows what changes Congress will make to it? And it’s still unclear whether the state legislature will vote to let local agencies institute taxes or fees to fund transportation projects, or if RTD will soon find itself under increased governance. What we can predict is that if funding transportation projects was difficult before, it will be even more so in a post-COVID-19 world.