Bill Zimsky on Airports, Roads and Bridges – Guest Opinion
Guest Opinion: Bill Zimsky on Airports, Roads and Bridges in La Plata County
Now that the voters have rejected mill levy increases for both the expansion of the airport and for a dedicated fund for improving the County’s roads and bridges the natural follow up question is how should proponents of these two proposals move forward in order to ultimately accomplish their respective goals. The short answer for both issues is to hold tight, gather more data, see how the national and local economies fare over the next few years, and explore other funding mechanisms.
Before addressing each issue, for the purposes of full disclosure I need to state that I voted for the airport expansion but against the road and bridge mill levy.
The voters soundly rejected imposing a 20-year mill levy on property owners to fund the airport by a 62% to 38% margin. Unlike a certain other election that was held on Tuesday, this result surprised absolutely no one. Nonetheless, even in the face of such a sharp rebuke, proponents are encouragingly undeterred. An environmental assessment will proceed, since it is a necessary prerequisite for any future expansion. In addition, proponents are taking another look at the proposed expansion plans and presumably looking at other funding mechanisms.
There is an undeniable need for an expansion of the airport. In his op-ed piece published in the Herald, Roger Zalneraitis, Executive Director of the La Plata Economic Development Alliance emphasized a number of reasons why expansion is necessary: to add room to bring in a third airline to increase competition; a tarmac that is too small for the larger aircraft the airlines are deploying; delays caused by one de-icing facility and inadequate baggage handling areas; no storage space for aircraft parts, which sometimes cancels flights; and an undersized security area that can cause passengers to miss flights.
In addition, there is no denying that while the facilities have remained essentially unchanged, other than the addition of a much needed waiting area, use of the airport has steady increased over the past years. Enplanements have doubled from 96,560 in 2003 to 193,537 in 2014. Despite low economic growth since 2008, enplanements increased by 44% from 2008 through 2014 (134,386 to 193,537). Although there was a slight decline in 2015, that was attributable to the withdrawal of services by Frontier Airlines made in seasonal flights and the decline in 2016 reflects the loss of Frontier Airlines.
So, in face of a sound defeat in the face of an obvious need, how can the proponents flip the vote? To answer this question, one has to understand why people voted no. I believe that these voters fall into four groups, some of which are overlapping.
The first group of no voters do not want expansion of the airport because they fear, as the saying goes, “if you build it, they will come.” There is a segment of the population that does not want “them” to come. This segment is against both population growth in the region and increased tourism. No matter how proponents tweak the expansion proposal, these voters are going to be against any type of airport expansion.
The second group are voters who almost uniformly vote “no” on tax increases. I am usually in this group, but was persuaded to vote in favor of the proposal by the arguments presented by the proponents. Thus, based on my personal experience, some of these voters are what political operatives classify as “persuadables.”
The third group consists of persons who believe that a mill levy is not the proper mechanism to raise the funds. These voters are not convinced that, as John F. Kennedy said (using a borrowed phrase), “a rising tide lifts all boats,” or at least would not lift their boat. In other words, while they probably agree that the airport expansion will benefit the local economy, they believe that such benefits will only inure to a small segment of the community that directly benefit from increased tourism or an increase in population. Some members of this group could be converted from no to yes if the proponents focused on the benefit of the expansion of the airport for the community at large.
It does not appear that there is an appropriate alternative funding mechanism that could help garner support from this final group of voters. Currently, the FAA is willing to contribute $40 Million to the expansion of the airport, but that commitment is based on the airport authority obtaining a $40 Million bond. In turn, the only way to get a bond is through the imposition of a mill levy or a sales tax dedicated to paying off the bond over twenty years. Increased user fees or lodging taxes, which would be paid by those who would directly benefit from the airport expansion, are insufficient bases on which to obtain a bond.
An increase in sales taxes would incur resistance from some voters who are now in favor of expansion. Moreover, sales taxes are generally regressive, i.e., they have a bigger impact on poorer residents who, in turn, generally enjoy less benefits from the expanded airport.
The final group are those that do not believe that expansion is necessary, or at least, not necessary at this time.
Thus, I believe that the proponents should re-group and bring this issue to the voters in 2018. This additional time will provide the proponents the opportunity to quietly campaign to convince the persuadably “no” voters that the expansion is necessary and would benefit the community as a whole. In addition, two more years of increased enplanements may help to convince some that the expansion is indeed necessary.
The other advantage of submitting the vote during an “off year” election, is that the voter pool decreases and the proponents can more easily identify voters who participate in off year elections and be able to make more personal contacts. (23,215 ballots were cast in the 2014 off-year election, while 31,561 ballots were cast this year.) Every political consultant agrees that the most effective method of both persuasion and getting the voter to actually cast a ballot is through personal contract, multiple if possible. Putting together a two-year campaign may enable the proponents to make the necessary personal contacts to flip the vote.
County Road and Bridge Mill Levy
For the second consecutive election, the voters told the County that they are unwilling to establish a $45 Million fund to be spent under a 10-year Road and Bridge Capital Improvement Plan by 2.4 mill levy increase that would sunset in 10 years. In the 2015 election, the vote was 52% to 48% against. Undeterred, the County tried again and the voters rejected the proposal by the same margin. It should be noted that last year’s vote was on an “off year” election with 12,671 total votes cast on the issue, while this year’s vote total was much higher, 29,456, since it was during a presidential election. In other words, voter sentiment regarding this proposal has cemented.
The voters have spoken (twice) and the County should listen and hold off on trying to get this measure passed for at least another four years. In the meantime, the County is going to need to fund the needed road and bridge repairs by reallocating funds within the County’s budget to road and bridge needs, one of the options suggested by the La Plata County Fiscal Sustainability Steering Committee that the Board of County Commissions convened to study this issue.
Such reallocation presents the County with a great opportunity to demonstrate that additional funding for road and bridge projects will be put to good use if the County believes that it is necessary to go back to the voters with another long-term capital improvement plan.
The justification for the mill levy increase was that the County’s tax revenues have declined in the recent past and the decline is projected to continue. A four-year hiatus will allow the voters to determine whether the County’s projected decline in tax revenues manifests itself and, if so, to what degree. As the County has noted, the driving factor in the dip in tax revenues has been the decline of oil and gas production coupled with a drop in natural gas prices. These trends may continue, but it is more probable than not that gas prices will rebound over the next four years. In addition, it is possible that production may actually increase if oil and gas companies are able to successfully produce from the Mancos formation in La Plata County. Production from horizontal wells completed in the Mancos formation have proved promising in the both the Piceance Basin in northwest Colorado and in the DJ Basin in Weld, Arapahoe and Adams counties. If oil and gas companies seek to develop the Mancos formation in La Plata County, the County should welcome such develop and not make it unnecessarily burdensome to so. (As a point of full disclosure, I am an oil and gas attorney who stands to benefit if more wells are drilled in La Plata County. That being said, my plate is more than full working for clients who are operating in other parts of Colorado as well as in the southern San Juan Basin and the Permian Basin in New Mexico, as well as the Bakken and Three Forks formations in North Dakota. )
Finally, the County should also explore funding mechanisms other than an increase in the mill levy. As noted above, some voters rejected the airport expansion based on the argument that the people benefiting from the airport expansion should bear the costs. While I do not believe that this reasoning is sound with respect to airport expansion, I do see the merit of the argument with respect to funding road and bridge projects.
The Fiscal Sustainability Steering Committee recommended two other funding mechanisms, a use tax and impact fees, both of which are more equitable with respect to funding. A use tax recovers lost sales taxes on vehicles purchased outside of the County when those vehicles are registered in the County. It would also recover lost sales taxes on construction materials when the County issues a building permit. These taxes are fair since they are directly related to road usage.
Imposing impact fees for new construction is another equitable method of revenue collection since it is tied directly to road usage. As the Committee stated: “Such fees provide the development community a degree of cost-certainty and appropriately shift a portion of the cost for needed infrastructure investments from all taxpayers to the direct beneficiaries of those improvements.” For a point of reference, the County left about $2 Million on the table by not imposing impact fees on the Three Springs development that is directly affecting county road usage.