Transportation Maintenance Fee FAQs
- A well-maintained transportation system ensures the safe and efficient movement of people, goods, and services and is essential to the city's economic vitality and environmental sustainability.
- Transportation funding faces a one-two punch: revenues have stagnated and costs have increased. Since 2002, The Transportation Division’s purchasing power has decreased by almost 40 percent. Largely due to global and national influences, the cost of doing business in the public works sector has escalated more than other businesses due to the cost of asphalt, concrete, fuel and other materials.
- Transportation funding is dependent on a dedicated sales tax that is unpredictable and subject to increases and decreases (in responses to a changing economic climate) while demand and use of the system does not change. The city’s Blue Ribbon Commission recommended diversifying transportation funding sources to minimize the impact of fluctuating sales tax revenue.
- A Transportation Maintenance Fee is a monthly fee that is collected from residential and commercial properties based on use of the transportation infrastructure, measured by the average number of trips generated by different types of commercial and residential land uses.
- The TMF provides a local and stable source of revenue that can be used to maintain streets, sidewalks, pedestrian crossings, bike lanes, multi-use paths and medians.
A TMF remains the recommended finance mechanisms for many reasons:
- The TMF applies to all residential and commercial properties within the city limits, spreading the cost among the broadest segment of the population;
- The methodology to assess the fee is based on standardized Institute of Transportation Engineers (ITE) trip generation rates by land use type and size as the best available and cost-effective surrogate for actual travel behavior;
- The TMF diversifies the city’s transportation funding sources and decreases dependence on unpredictable sales taxes;
- The fee can be indexed to inflation, so as the cost of transportation operations and maintenance (O&M) change, the fee can be adjusted;
- The fee can be assessed through an existing utility billing system to reduce the costs of implementation and administration; and
- Discounts, rebates or other kinds of incentives can be incorporated into the design to reward or encourage the adoption of programs and/or policies implemented to reduce vehicle trips.
- Funding from the TMF would be used to pay for specific operations and maintenance work such as pavement maintenance and could also potentially include traffic signals, bikeways, sidewalks, medians, street sweeping, snow and ice removal, graffiti removal, resurfacing, and pothole repair.
- A TMF could also be designed to maintain transit service and programs (like the Eco Pass program) as well as system enhancements.
If no other funding options are implemental and O&M continues to eat away at the total budget, there will not be sufficient funding to maintain current service levels or to provide enhancements to complete the core system.
- A new, local TMF is one piece of the puzzle - it is a compatible funding source that can work in tandem with the existing and future financial strategies to support the community’s short-term and long-range transportation system.
- The city is in the process of updating its Transportation Master Plan, which will identify long-term funding needs to support the community’s vision plan.
- Fees would be paid by both commercial and residential property owners and collected through their regular utility bill, similar to the existing stormwater fee paid by properties in Boulder.
- Most communities that implement a TMF use trip generation rates developed by the Institute of Traffic Engineers (ITE) as the basis for determining rates. For residential properties, a flat rate is typically applied on a per unit basis. TMFs for commercial properties are based on square footage or acreage, using the standard ITE trip generation rates for a variety of land uses, including industrial, institutional, retail, high-traffic retail, and miscellaneous uses.
- Since commercial uses are captured, in-commuting trips are included in the calculation.
- The amount raised by a TMF depends on how high or low the residential and commercial rates are set in relation to trip generation rates.
- A TMF that raises $2.5 million per year would cost households approximately $36 per year or $3 per month. A TMF that raises $5.6 million per year would cost households approximately $80 per year or $6.67 per month.
- The amount charged to commercial properties would vary significantly based on the type of business, its size, and its estimated vehicle trip generation.
The recommended alternative to a TMF is a transportation tax that uses the same methodology based on vehicle trip generation, but applied similar to an excise tax. This option would exempt large tax-exempt institutions like the Boulder Valley School District (BVSD), the University of Colorado (CU) and the Federal Labs (NOAA/NIST/NTIA). Since these large institutions are exempt from the tax, it is estimated that rates for all other non-exempt commercial and residential properties would increase by approximately 12 percent. The tax may be more flexible in terms of how the revenue could be spent, but less flexible in regard to its ability to adjust to changes in O&M costs and inflation. Tax credits or rebates could be incorporated in the tax design as well.
Another option is an occupation privilege tax or head tax. A head tax is imposed on employees and/or employers. One of the benefits of the head tax is that the methodology would be simple and straight-forward. With approximately 100,000 employees working in Boulder, an annual tax of $25 per employee would generate an estimated $2.5 million in annual revenue and an annual tax of approximately $56 per employee would provide $5.6 million. An employer can also choose to limit the financial burden by sharing costs with employees by agreeing to pay a portion of the head tax. One of the drawbacks of the head tax is that the burden of maintaining and improving the city’s transportation infrastructure and operations would be carried by Boulder residents who work in Boulder and in-commuters. Boulder residents that work outside of Boulder would not pay this head tax.
The last option is an increase to the existing 0.6% dedicated transportation sales tax or a general sales tax increase. The Blue Ribbon Commission clearly recommended that the Transportation Division diversify its funding sources to counter the unpredictability of sales tax revenues. Sales taxes are not linked to transportation behavior or impacts.
The capital bond funding is helping the city catch up on deferred maintenance that has been set aside over the last decade. These investments are occurring across the community in important places including parks, city buildings and the multimodal street system. While the bond funds are most welcome, they are a one-time, short-term infusion and do not address the ongoing needs for pavement maintenance and operations.
Once bond funding is fully expended, the estimated unfunded need for pavement maintenance (beginning in 2015) is approximately $1.6 million per year. The proposed TMF would be implemented when the Capital Improvement Bond expires.
There have been some equity questions since all residents would pay the same rate regardless of their travel behaviors. For example, a resident who uses transit and bicycling as their primary modes of transportation would be charged the same amount as a resident who drives everywhere. While it would be ideal to charge households on their actual mode use, there is not currently a cost effective way of accurately measuring the travel behavior of every household on an annual basis to assess different rates. Also, the amount assessed to residential properties is relatively small and any discounts or rebates would be too small to incent vehicle trip reduction.
No matter what mode is used for travel, all residents benefit from a well maintained transportation system of roads, sidewalks, bike lanes, multi-use paths, lighting, signage, signals, and striping.
TMF have been ruled as a legal financing mechanism in the state of Colorado (Bloom v. City of Fort Collins, Co., 1989). The city of Loveland has had a TMF in place since 2007.