RTD Denver 2024 TABOR Ballot Measure Case Study

November 2024

The Outset

In 1992, voters in Colorado passed a series of constitutional amendments known as the Taxpayer’s Bill of Rights (TABOR), which were designed to limit government revenue. Major provisions include mandated taxpayer approval for new taxes as well as limits on the annual growth of tax revenues that governments can retain. Denver’s Regional Transportation District (RTD) is primarily funded by two sales and use taxes approved by voters, which comprise roughly 70% of the agency’s revenue. These two sales and use taxes are a 0.6% tax known as the base tax, and a 2024 voter-approved sales and use tax of 0.4%, which was passed to fund RTD’s FasTracks system expansion.

RTD’s base system sales tax of 0.6% was set to be subjected to TABOR’s revenue growth caps starting in late 2024. When triggered, TABOR’s revenue growth caps limit the ability of governmental entities in Colorado to retain revenue that exceeds certain underlying revenue growth restrictions. These TABOR restrictions typically have only a limited impact on government revenue streams during periods of economic expansion, but can have much more significant impacts on revenue streams in the aftermath of economic contractions. This is because revenue streams often plummet before rebounding. The plummeting of tax revenue sets a new, lower baseline for tax revenues from which retained revenue may grow. Because of TABOR’s growth restrictions, governments face limited ability to retain the full increase in tax revenues when the economy subsequently expands. This is known as the “ratcheting down” effect of TABOR, whereby government funding slowly erodes over successive economic cycles. For example, had RTD been subjected to TABOR growth restrictions in the aftermath of the Great Recession, staff estimated the agency would have had ~ $60 million less in annual revenue.

The Funding Solution

While the immediate threat of significantly reduced tax revenues was not on the horizon, adept foresight from RTD’s Board of Directors and management team led to the establishment of a working group of directors and senior staff in 2023 to explore ways to ensure long-term stability for the agency. This working group determined that the most immediate path to shore up long-term revenue stability was to pursue a ballot measure requesting voter permission to remove RTD from TABOR’s restrictions. Many local city and county governments across Colorado have successfully received voter relief from TABOR’s revenue limits, and in the early spring of 2024, RTD’s leadership concluded that the time had come for RTD to seriously consider asking voters for the same relief.

The Next Steps

RTD’s Board of Directors has the legal authority to refer certain taxing measures to voters, which is the same authority the Board used to refer the FasTracks measure to the ballot in 2004. Given this authority, in the spring of 2024, management contracted with a polling firm to conduct voter research on the likelihood of voter approval of an RTD ballot measure. This research also sought to identify reasons why respondents supported or did not support RTD in general, which was immensely valuable information to RTD’s leadership, as those insights were later used to inform the ballot measure language.

Additionally, the polling firm was asked to poll respondents on the likelihood of their approval of both a permanent removal of the TABOR revenue cap or a temporary (10 year) removal of the revenue cap. Ultimately, polling indicated very high favorability of both a permanent lifting of the TABOR cap (68%) as well as a decade-long lifting of the revenue cap (71%). Given the favorability of the polling results, the board and management began to craft ballot measure language, and in doing so, they incorporated feedback from the polling around what services provided by RTD respondents indicated were most valuable.

In June of 2024, the board voted to refer a measure asking voters to permanently remove the TABOR revenue cap. And in the language of the referred measure, the Board included examples of what RTD would continue to do with the funding it was already receiving but could potentially lose. This included:

  • Maintaining and expanding bus and rail service
  • Investing in a state of good repair
  • Maintaining transit services for people with disabilities
  • Providing cleaner transportation options for the region
  • Continuing to offer free or reduced fares to individuals 19 and under

The Election

Following the board’s referral of the ballot measure, staff worked with election officials in the eight counties, which are either fully or partially included in the RTD, to place the referred question on the ballot. There are strict prohibitions preventing both RTD staff from working to advance a political candidate or cause, as well as the agency’s ability to spend funds to support any candidate or election measure. As such, there was no connection between the agency and the campaign efforts to support the measure. RTD is able to use resources to educate voters on both sides of the issue and stood up a website to share information about the agency’s financial outlook (https://www.rtd-denver.com/about-rtd/financial-outlook). Additionally, by law, RTD solicited, collected and synthesized pro and con statements on the ballot measure and submitted those to the various county election officials for inclusion in ballot information booklets mailed to voters.

Official organizing in support of the measure was limited, though a small group of community organizations and transit advocates banded together to raise public awareness of the issue.

The measure was approved by voters with 71% of the vote, which closely mirrored the results anticipated by the polling done in the spring of 2024. Further, the measure was approved by more than 50% of voters in each of the eight counties RTD operates in. And while the measure did not bring new revenue to the district, the results indicate strong support for transit in the region.

The Conclusion

RTD enjoys strong support for its current taxing levels and service amongst the voting public. The agency has added significant stability to its sales and use tax revenues, which provide ~70% of RTD’s total revenue. Moving forward, RTD will need to take additional steps to ensure revenue stability and provide resources for growth. The efforts during the 2024 election cycle have helped to lay the groundwork for future engagement with voters.

Ballot Measure Language 

WITHOUT IMPOSING ANY NEW TAX OR INCREASING ANY TAX RATE, SHALL THE REGIONAL TRANSPORTATION  DISTRICT’S (“RTD”) AUTHORIZATION TO COLLECT, RETAIN AND SPEND ALL REVENUES IT RECEIVES FROM  ALL SOURCES, INCLUDING ITS SALES TAX REVENUES, GRANT FUNDS AND OTHER MONEYS LAWFULLY  RECEIVED BY RTD FROM THE STATE OF COLORADO OR ANY OTHER SOURCE, ORIGINALLY APPROVED BY THE  VOTERS IN 1999, BE CONTINUED TO PERMIT RTD TO RETAIN REVENUE NECESSARY TO PROVIDE VITAL RTD  SERVICES, INCLUDING BUT NOT LIMITED TO: 

  • PROVIDING TRANSPORTATION CHOICES TO LOCAL RESIDENTS BY MAINTAINING AND GROWING  CURRENT LEVELS OF BUS, AND RAIL SERVICES; 
  • REPAIRING AND IMPROVING RAIL LINES, BUSES, BUS STOPS AND STATIONS AND OTHER  INFRASTRUCTURE TO PRESERVE THE PUBLIC’S INVESTMENT IN TRANSIT; 
  • MAINTAINING THE AVAILABILITY OF SERVICES FOR PEOPLE WITH DISABILITIES; • CONTINUING TO PROVIDE CLEANER, MORE EFFICIENT METHODS OF TRANSPORTATION OTHER THAN  DRIVING ON ROADS AND HIGHWAYS; AND 
  • PROVIDING TRANSPORTATION SERVICES FOR YOUTH 19 YEARS OF AGE OR YOUNGER AT REDUCED  OR NO FARES; 

WITH ALL FUNDS SUBJECT TO INDEPENDENT AUDIT AND OVERSEEN BY THE ELECTED RTD BOARD; AS A  VOTER APPROVED REVENUE CHANGE AND EXEMPTION FROM ANY REVENUE AND SPENDING LIMITATIONS  UNDER ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION?

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