Opinion: No tax increases until growth pays its own way


Some seriously flawed initiatives to pay for transportation and schools are on the ballot: Proposition 110 raises our taxes for 20 years, but generates only enough money to meet a fraction of the growth-related transportation needs generated during that time. Proposition 109 borrows $3.5 billion for roads, to be paid off by diverting our existing taxes from other uses. Amendment 73 constitutionally changes our tax rates and raises an excessive $1.6 billion per year to fund education costs, yet completely ignores the almost half a billion dollars per year cost of building new schools to address our growing population.
None of these initiatives makes any attempt to address the underlying cause of these huge funding gaps: Colorado’s growth is not paying its way. If we actually required new development to fully mitigate its impacts, most of the need for these tax-and-debt increases would go away.
I realize that the idea of requiring developers to solve the problems that they create is a radical notion. After all, we are continually told that growth is beneficial. But, then, why are we being asked to raise our taxes or increase our debt to deal with ever-worsening traffic? Why are we forced to vote every few years on more funding for new schools? It’s time that our elected officials focused on eliminating these hidden subsidies that grant development huge profits but leave the rest of us paying for its impacts.
I participated in the 2008 CDOT Blue Ribbon Transportation Commission’s comprehensive study that showed that just to prevent increases in traffic congestion at statewide, regional and local levels together would cost about $2 billion per year over and above expected tax and fee revenues.
More recent CDOT analyses show that the statewide portion of this deficit alone is accumulating at about $1 billion per year. That’s about $10,000 for each new Colorado resident just to keep state-level traffic congestion from getting worse; the need for regional and local improvements almost doubles that.
The deficit for schools is similarly alarming. A Boulder Valley School District study some years ago (in which I also participated) put the costs of adding new schools at about $13,000 (in current dollars) above ongoing tax revenues for each new single-family house. But we are forced to pay for this through tax increases, because the legislature passed a law forbidding school impact fees.
The choices are stark — either new development pays these costs, or we pay higher taxes or suffer degraded levels of service. Remember, developers don’t just sell houses or office space; they sell access to roads, schools, parks, libraries, etc. If these developers don’t pay for the new facilities needed because of their developments, selling this access becomes pure profit.
Raising taxes can’t solve this inequity. Even if taxes were raised enough to actually maintain levels of service in the face of continued growth, it would be many decades before a given new development would have paid even a fraction of its share of the costs it imposes on the rest of us.
The best way to ensure that we are not negatively impacted by growth is to impose development impact fees adequate to ensure that new development pays the costs it imposes. To set these fees, the first step is to measure current levels of service, such as travel times on major roadways, or square feet of equipped school space per resident. The next step is to develop plans and budgets adequate to maintain these levels of service given the demands of new development. The final step is to allocate these costs among new residential units or square feet of office and commercial space. This parallels the well-vetted approach used by municipal water utilities to set tap fees.
Impact fees are not taxes, so increasing them does not require a TABOR vote. The money can go into “enterprise funds” to avoid TABOR’s revenue and expenditure limitations. Impact fees do not increase housing prices and commercial rents, because prices and rents are set by market demand, not costs. Developers, even if their excess profits are cut, cannot arbitrarily raise prices or rents beyond what buyers and renters will pay.
Colorado would be leading the country if we did this. And we clearly need to, given the lure of our strong economy and beautiful natural setting.
Besides, development impact fees provide an excellent self-regulating mechanism for growth. If the growth is worth the cost, then new development can afford to pay for its impacts. And if not, then that growth shouldn’t happen.


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