Rail plan on the brink: Court ruling and ballot fight could kill funding

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

On April 29, Governor Jared Polis declared in a press release that Colorado had struck a deal to bring passenger rail to the Front Range — three daily round trips between Denver and Fort Collins, launching in 2029, with no new taxes. 

“At nearly half the cost of previous studies,” he wrote, “this agreement proves that through partnership and collaboration, passenger rail service across the Front Range is not a far-off dream, but a reality.”

The day before, RTD’s board voted to authorize $5.58 million from its FasTracks savings account and support the project’s preliminary funding framework. The term sheet itself was executed April 30 between the Colorado Transportation Investment Office (CTIO), a government-owned enterprise within CDOT, and BNSF Railway.

The price really is nearly half of prior estimates because of what was stripped from the project to get there. What those cuts cannot solve is a separate problem. The fee revenue that funds $176 million of the project faces two independent threats that appear nowhere in the contracts signed to advance it.

What was cut to get there

A March 2025 state study evaluated Front Range service starting at six daily round trips and priced the infrastructure at $885 million. The term sheet gets to $333 million by delivering half the service through a fundamentally different model. 

Three competing cost estimates show how the proposed Denver–Fort Collins rail service dropped from as high as $885M to roughly $333M under the negotiated term sheet—cutting projected capital costs by more than half. Source

The 2025 study assumed two separate passenger services on the BNSF line. A separate RTD feasibility study assumed five train sets. 

The term sheet combines both into one operation — one trainset, one backup — and schedules service so passenger trains never pass each other on the line. Station infrastructure stays minimal.

The starter service was structured outside federal rail jurisdiction — meaning performance standards are governed by contract under state law rather than by federal regulators. 

RTD staff noted the figures are based on 2-30 percent design and “will change.”

Officials emphasize the numbers are preliminary, with final costs still subject to negotiations, design refinement, and board approvals before any construction moves forward. Source

Where the money comes from

CoCo’s $330 million capital cost splits between two pools. 

RTD contributes $156 million from its FasTracks Internal Savings Account — a reserve built from a 0.4 percent sales tax Denver-area voters approved in 2004 for the Northwest Rail Line from Denver to Longmont. 

That line remains unbuilt 21 years later. RTD Board Chair Patrick O’Keefe said in February: “We don’t have enough money to build it. That’s just a fact.”

The remaining $176 million comes from CTIO which is financed through SB24-184.

The draft financial plan splits upfront costs between RTD and the state while projecting ongoing operating expenses of roughly $10–12 million annually per partner, with shared funding across agencies. Source

The bill imposes a congestion impact fee of up to $3 per day on short-term vehicle rentals. CDOT projects the fee will generate $56.7 million this fiscal year, rising to $60.5 million by FY2027-28.

It was structured as a fee, not a tax. TABOR requires voter approval for new taxes but exempts fees tied to government services. The legislature used TABOR’s enterprise fee exemption to avoid a public vote.

Nine days before the term sheet was signed, RTD’s April 21 board packet acknowledged the agency is “monitoring legal challenges and fee definitions” tied to SB24-184. 

The lawsuit

Six weeks before the term sheet was executed, federal judges heard arguments over whether the fee is legal at all.

The American Car Rental Association sued the Colorado Department of Revenue in September 2024, arguing the $3-per-day fee violates 49 U.S.C. 40116 — sometimes called the Anti-Head Tax Act — which restricts states from taxing airport businesses. Half of Colorado’s rental car transactions occur at airports. A federal judge dismissed the case in September 2025, finding the fee applied equally to on-airport and off-airport rentals.

ACRA appealed. The case is before the 10th U.S. Circuit Court of Appeals, which heard oral arguments March 18. The panel pressed both sides, including whether a fee collected from consumers rather than businesses falls under the statute’s language at all — a point that could favor the state. A ruling is pending.

If the court reverses, the $176 million CTIO contribution disappears. The term sheet identifies no backup. CTIO’s share is listed as financed with SB24-184 revenue — period.

The ballot threat

A constitutional amendment moving through signature gathering could cut off the same revenue stream without a court.

Initiative 175, filed November 7, 2025, would require transportation-related revenues — including the vehicle rental fee — to be spent exclusively on roads, bridges and the Colorado State Patrol. Proponents filed a 75 percent-threshold notice with the Colorado Secretary of State on May 1 — confirming backers have collected at least 93,179 of the required 124,238 signatures. The deadline to submit is May 27.

If it passes in November, the rental fee would be constitutionally locked to road-only uses starting January 1, 2027 — before CoCo breaks ground.

The Legislative Council Staff listed the vehicle rental fee among revenues that would be captured: $22 million in fiscal year 2026-27 and $45.6 million in fiscal year 2027-28. Initiative 175 would obligate roughly $2.1 billion annually to road-only uses, with an additional $352 million per year in general fund and cash fund revenue newly required to flow to the State Highway Fund. 

The LCS noted “other programs and initiatives besides road transportation projects would have less funding or require funding from other sources.”

Because Initiative 175 proposes adding constitutional language, it requires a 55 percent supermajority. 

A poll commissioned by opposition coalition Keep Kids First Colorado found initial support for Initiative 175 at 60 percent, with only 17 percent saying they would definitely vote yes. Global Strategy Group conducted the poll April 16-21 among 400 likely voters.

After voters learned of the potential general fund impact, support dropped to around 34 percent.

Initiative 175 is backed by the Colorado Contractors Association and the Colorado Construction Industry Coalition, whose members include Flatiron Constructors and Kiewit Infrastructure. 

The November conflict

The $3 million contract CDOT signed with the Front Range Passenger Rail District in March is building toward a November 2026 ballot measure asking voters along the rail route to approve a new sales tax. The contract calls for specific ballot-ready tax levels and debt-capacity schedules, but no referral has been made. 

At the April 6 naming ceremony in Denver, Polis described the mechanism as “a sales tax increment, probably around a quarter to a third of a penny on every dollar transaction” to fund expansion. 

FRPRD spokesperson Tara Trujillo confirmed in an email to RMV that the term sheet covers only the three-round-trip starter service, noting the district has modeled up to 10 round trips — an expansion requiring additional funding beyond the term sheet’s $333 million.

SB26-172 passed the Colorado Senate May 1 and heads to a House committee — it would shrink the FRPRD boundary from 13 counties to 30 municipalities, concentrating the voter district in communities closest to the proposed stations.

If Initiative 175 also qualifies for November, voters would face both measures on the same ballot. One would ask them to approve a new sales tax to fund the full rail build-out. The other would constitutionally prohibit use of the rental fee revenue the starter service depends on.

Neither the ballot access contract nor the April 30 term sheet includes a backup plan if Initiative 175 passes or if the federal court strikes down the rental fee. Both include standard state funding clauses that allow the government to walk away if money becomes unavailable — but neither addresses these specific threats.

RMV asked Governor Polis’s office whether any backup funding plan exists if the rental fee revenue is redirected or invalidated. The office did not respond.

The December vote

Governing boards are expected to vote on full construction appropriations in December — after the November election.

RTD Board Director Chris Nicholson said in an email exchange with RMV that the board will be voting on the item regardless of any ballot outcome. The full $156 million FISA commitment — accumulated from a tax residents have paid since 2005 — could be formally redirected without a public vote.

Lisa Kaufmann, Polis’s Senior Strategic Advisor, told CPR on April 8 the project has “a clear path to fund the service with existing resources.” 

Whether that path is open in December depends on a federal court ruling neither side can predict and a November ballot question the state does not control.