Wednesday, January 19, 2011

RTD Makes Another Revenue Run

RTD and its client groups, especially the region’s municipal leaders and their consultants, are back with another tax increase. Just three years ago, RTD wanted to essentially double the tax haul of 4-tenths of a cent that it had cajoled out of a more trusting and prosperous electorate in 2004.

Fortunately, regional political stakeholders staged a mini-revolt. Some members of RTD’s leadership responsible for the deceptive proposal, both in terms of cost and revenue, were pushed out. But, local advocates have not changed the plan at all, but have just become more modest in how much revenue they will go after.

Three major criticisms of the tax-doubling effort still remain unresolved:

• Can RTD actually build the project within reasonable budget constraints? It now argues that construction prices are cheaper. They are indeed, but may not be in 5 years when much of this construction ramps up.

• Are RTD’s latest revenue projections believable or, like in 2004, are they just based on the politics of what management thinks voters will tolerate? The current constrained revenue climate (i.e., the new normal) may be around for a long time. Given RTD’s track record, will anyone be surprised if it returns to demand another tax increase before the end of this new decade?

• And finally, the actual plan, which was designed by the same people who could not manage the project costs or estimate accurately the revenue stream, continues mostly unexamined. It is now driven by pure regional politics. Advocates argue that since voters throughout the region are already paying the RTD sales tax – regardless if the particular line makes transit sense – it must be built in its entirety as fast as possible. More buses may be a much more economical and effective means of moving commuters, but it does not have the cachet of rail or the support of developers.

Removing another $35 million or $70 million (either one-tenth or two-tenths of a cent of sales tax) from hard-pressed consumers at this moment in the weak recovery is counter-productive.

All in all, RTD still has to make its case that the region will be better off if it imposes its new tax before the recovery is more certain.

See Denver Post article:  RTD board hears three options to complete FasTracks

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