Like most of his fellow road warriors, Bill Owens has spent too much of his life stuck in traffic, usually during what passes for rush hour in the Denver metroplex. When he lived in southeast Aurora, his daily crawl on I-25 to downtown took an agonizing 30 to 45 minutes--and that was on a good day. There was no way out, really, except to find a new home that was closer to work.
Like the Governor's Mansion.
Declaring the current level of congestion on the interstate to be "totally unacceptable," Owens made highway projects a focus of his campaign. In ads and debates, he hammered away at the lack of leadership in the governor's office on traffic issues--a tradition of Democratic foot-dragging stretching back two decades, to Governor Richard Lamm's effort to drive a "silver stake" through the 470 beltway. Owens pledged to add lanes and develop a rapid-transit system in the southeast corridor in record time. Voters ate it up, particularly since his opponent, Gail Schoettler, seemed to think the traffic problem was more a question of lifestyle than lane size. Schoettler insisted the state couldn't pave its way out of the mess, an assertion no commuter wanted to hear.
Six months after his victory, no one can accuse Owens of not taking his pledge seriously. He's extracted from the legislature a stack of reforms that are supposed to allow the Colorado Department of Transportation to operate more efficiently in designing and contracting major highway improvements. He's boosted the visibility and political clout of CDOT, tapping former foes to serve in key posts--gubernatorial rival Tom Norton as director and developer Joseph Blake, a Norton supporter who helped lead the campaign for a highway tax that Owens opposed, as an appointee to the Colorado Transportation Commission. And he's come up with a bold scheme to finance new roads by borrowing billions of dollars against future federal funding, a plan that's supposed to speed up construction schedules and deliver commuter relief in a fraction of the time such massive projects usually require.
But the road to better highways is long and winding, and the governor's plan has already hit a few detours. Last month the Colorado Supreme Court ruled that his administration cannot proceed with its financing scheme without first obtaining voter approval. An unlikely array of opponents, from liberal Democrats to conservative anti-tax activist Douglas Bruce, is already lining up to denounce the plan. CDOT's eagerness to get the show on the road has also rattled a few cages among the light-rail acolytes at the Regional Transportation District, an agency known for fiercely protecting its own road shows--and sideshows.
Pursuing his highway agenda has revealed some of the contradictions built into Owens's policies. A fiscal conservative who opposed last year's Referendum B, a measure that would have allowed the state to retain $1 billion in surplus tax revenues and apply half of that amount to transportation projects, he's now proposing that the state go $2.3 billion into debt to fund many of the same projects. A veteran light-rail critic--during the campaign, he argued that a fixed guideway bus line would be a cheaper, more effective fix along I-25 than another rail line--he's now promoting a twenty-mile stretch of railway that will be far costlier than anything the RTD's electric-choo-choo enthusiasts have been able to get on track. It's as if the electorate had invited Barry Goldwater to dinner, only to have LBJ show up instead.
But supporters of the governor's transportation plan insist that his conservative background only makes the proposal more credible. His strong relationship with Colorado's primarily Republican congressional delegation, they say, could help the state get federal matching funds that would elude a more liberal governor. "It's like Nixon going to China," says RTD boardmember Jack McCroskey, a longtime backer of the southeast rail line. "Bill can get it done."
Others, though, see the plan as a dubious move into deficit spending, one that will enrich bond dealers and construction firms at the expense of taxpayers. They are troubled by the plan's rapidly ballooning price tag and CDOT's failure to designate how the money will be spent. Despite assurances to the contrary, they fear the money will be poured into a bottomless pit of I-25 upgrades, robbing the rest of the state of badly needed road improvements in order to accommodate the burgeoning business interests of metro Denver.
"I think it's outrageous to say that's a fiscally conservative approach, to spend money that you don't have," says Bruce, author of the Taxpayer's Bill of Rights (TABOR) amendment, the formidable cap on state taxation and spending that the highway plan seeks to finesse. "Credit-card government is something we want to avoid."
At the heart of the Owens plan is a funding mechanism known as transportation revenue anticipation notes, or TRANS, that allows states to raise money by issuing road bonds and using future federal highway funds to pay off the principal and interest. The build-now-pay-later bonds are becoming a trendy solution to long-neglected roads in a growing number of states from New Jersey to New Mexico. Backers argue that the proposed Colorado scheme wouldn't violate state prohibitions against contracting long-term debt because it would be subject to an annual appropriation of federal funding. In theory, the state could default on the bonds if the federal flow dried up.
Critics, though, say that TRANS financing risks the state's future economic health and its credit rating. Bruce and a trio of Democratic legislators filed objections to the plan with the Colorado Supreme Court, which had been asked for a speedy ruling on its viability. In a stinging defeat for the Owens administration, the Court ruled unanimously that the bonds, though not a "debt by loan," did represent a "multiple-fiscal year financial obligation" and that the TABOR amendment requires voter approval before undertaking such a move.
The entire issue now goes on the November ballot. Publicly, Owens and his backers have tried to sound cheerful about the prospect of a vote, but it's something they'd hoped to avoid. Three other major transportation funding proposals--Referendum B, RTD's Guide the Ride tax hike and a gas-tax increase--have gone down in flames at the polls in the last two years. Why should TRANS be any different?
"We don't expect [the court ruling] to affect the overall timetable," says CDOT spokesman Dan Hopkins. "The key is going to be getting across to the voters that this is not a tax increase."
The argument for the bonds revolves largely around the soaring construction costs of major public-works projects. Even though CDOT's budget has nearly doubled in the past five years, the agency can't begin to fund billions in roadwork out of the existing revenue stream. Borrowing allows the state to put dollars to work that it otherwise would not receive for years, cutting the timetable for construction and thereby saving hundreds of millions from the ravages of inflation--enough, in theory, to more than make up for the interest paid on the bonds.
But Bruce says the plan is riddled with dubious assumptions. The state plans to pay up to $600 million in interest on $1.7 billion in long-term bonds, a rate of interest that's actually double the current inflation rate. Assertions that the "construction" inflation rate will be much higher over time are speculative, he insists.
"They're falling into the oldest economic fallacy in the book, that whatever trend we have now will continue in the future," Bruce says. "We're locking ourselves into a certain [interest] rate, but there's nothing in the proposal that says this will be paid off in fifteen years. It could be twenty--but the federal program they're relying on to secure the debt expires in five years, and Colorado doesn't have any guarantees that it will receive the same level of funding in the future. We're going to all this trouble to stand in line for a limited amount of federal handouts."
Bruce hopes to enlist a wide range of opponents to campaign against the proposal, including educators and environmentalists who fear that if the funding mechanism falters, other state programs and services will be cut in order to finish the roads. "You realize how strange it is for me to be agreeing with liberal Democrats," Bruce chuckles. "But we got rid of a tax-and-spend Democrat and elected a borrow-and-spend Republican."
One powerful source of opposition, Bruce suggests, will be voters outside the Denver metro area. Legislators insist that the road package will benefit other areas of the state, too, but there's nothing in the language of the bill they passed that designates where the money will go, and earlier projections indicate that the bulk of the funds will be poured into the I-25 expansion.
"They can promise everyone personal taxi service for a year and it doesn't matter," Bruce says. "You can't trust them. These are the people who tried to rip us off of our right to vote and were caught by the Supreme Court 7-0--and by me."
The fate of the light-rail component of the plan is even more uncertain. In the past few months, the projected cost of building a line from South Broadway to Lincoln Avenue in Douglas County has risen from $400 million plus change to an inflation-adjusted $780 million. Raising the funds may require a separate ballot issue, possibly two, since RTD's exemption from the TABOR restrictions on debt would expire before the debt would.
For a brief time last fall, the ever-fractious RTD board seemed to be uniting around pouring resources into the I-25 line ("One-Track Minds," October 29, 1998), but that was before the November elections brought in a host of rail-happy new members keen on reviving proposed rail projects in several other corridors as well. Now the agency finds itself in an uneasy struggle over priorities with Tom Norton and the new regime at CDOT.
Insiders were puzzled when Owens named his GOP primary rival to the crucial transportation post, but now they're beginning to get the joke: Norton's penance for running against Bill Owens is that he has to deal with RTD for the next few years.
Norton declined to comment for this article. ("I guess he doesn't care much for Westword," says CDOT spokesman Hopkins.) But since his appointment, he's managed to command the squabbling RTD board's attention. Early in the game, Owens cut off $90 million in state funds that Romer had pledged to the southeast line, urging RTD to dig deeper in its own pockets. While still in negotiation with Norton about how to make up the loss, the board learned belatedly of legislative maneuvering that allows CDOT to receive Federal Transit Administration matching funds for mass transit in the Denver area--raising the possibility that CDOT, not RTD, will be in charge of the I-25 rail project.
"RTD has a sterling reputation for being able to build a rail line on time, within budget," notes RTD chairman Bob Tonsing. "CDOT doesn't have that kind of experience. They say that's not what they want to do, that they want to work with us, but this [legislation] was done entirely without consultation with us."
CDOT already receives federal funds for transit projects elsewhere in the state, Hopkins responds, and his agency merely wants to develop "flexibility" in the way the state could obtain financing for rail. "Some may view it as adversarial, but it's a fall-back position," he says. CDOT is authorized to take control of the federal rail funds only if the agency fails to reach an agreement with RTD by mid-October.
Tonsing recalls a time not so long ago when RTD competed for federal funds with the short-lived Transit Construction Authority; he says the rivalry merely confused the feds and hurt the region. But other boardmembers, including the ever-hopeful McCroskey, view CDOT's maneuver as a way to get the board to focus on building the southeast line rather than frittering away time and money on costly studies of other possible rail corridors that won't be built for decades, if ever.
"Owens has fired a shot across our bow, and I think we'll capitulate," McCroskey says. "The choice now is that we're either going to have this line or we can have nothing. We can go with the governor or get shut out of the process."
McCroskey suggests the transit agency could raise $130 to $150 million for the line through a creative borrowing plan of its own, setting aside $10 million a year from the existing revenue flow over the next twenty years to pay off the loan. Most of the funding, though, would have to come from federal coffers--up to $625 million, assuming an 80/20 match of federal and local dollars--and that's why he thinks it's smart for RTD to keep on the governor's good side.
"His goodwill is worth more than the $90 million the state's not going to give us," McCroskey says. "A lot more. He can do a lot of good for us in Washington."
Before the feds fork over the dough, though, the voters have to put out. Expect a long and loud campaign leading up to November, with the bond dealers offering the highway of your dreams and detractors conjuring up the road to ruin. If it does proceed, the project will mean billions flowing to private contractors through CDOT, which already does more business with the private sector than any other state agency.
Its impact on the average road warrior is harder to predict. Adding multiple lanes and a light-rail system to I-25 could simply increase the cone-zone misery in the short run while offering little appreciable congestion relief in the long run, since in a few years the increase in traffic volume is expected to keep pace with, if not outstrip, the improvements.
By the time the I-25 fix is done, ten or more years down the road, Bill Owens will be out of office. Yet his legacy would live on, the biggest public-works project in the state since Denver International Airport. Lurching across the metroplex from breakdown to tieup, the motoring citizenry might praise his name or curse it, but they could well be in his debt--and that of the bondholders--for years to come.