Gov. John Hickenlooper speaks with Colorado Matters host Ryan Warner in the state Capitol on Wednesday, Sept. 28, 2016.

(Nathaniel Minor/CPR News)

Updated with transcript -- The 2017 legislative session kicks off Wednesday but Gov. John Hickenlooper and legislative leaders have been working behind the scenes for months on a proposal to raise taxes to fund an estimated $9 billion in transportation needs over the next 10 years.

"We've outgrown our infrastructure. And so far we've been unwilling to step up and make these investments," Hickenlooper said.

Colorado law requires voters to approve tax increases. Hickenlooper says he hopes key elements -- including the type of tax and the amount -- can be worked out before the session ends in May and will generate broad enough agreement that lawmakers are willing to go back to their constituents and campaign on its behalf.

He said an Interstate 25 expansion is a top priority for the money. He compared Colorado's crumbling and overtaxed roads to those in Utah, a state with roughly half the population.

"They are spending four times what we spend in terms of adding capacity every year," Hickenlooper said.

Looking ahead to the upcoming session, Hickenlooper said he believes this is the year lawmakers will compromise on the longstanding issue of homebuilders' liability for construction defects. Builders say the state laws make it too easy for buyers to sue, raising costs and lowering supply. Consumer groups argue homeowners need protection from shoddy construction. 

In our regular monthly conversation, the governor also spoke about the Trump administration's promise to overturn the Affordable Care Act, saying Colorado will work to retain its health care exchange and is exploring the possibility of expanding it regionally to increase the number of plan participants and lower costs. 

Hickenlooper spoke with Colorado Matters host Ryan Warner. Click on the audio link above to hear the conversation. 

Ryan Warner: This is Colorado Matters from CPR News. I'm Ryan Warner. State law makers are back in session tomorrow, and anything they pass must have the signature of our first guest, Democratic Governor John Hickenlooper. We speak regularly at the State Capitol. Let's start this time with a proposal that both parties seem to support, asking voters to tax themselves to pay for transportation improvements. Remember that any new tax in Colorado has to have voter approval. CDOT has identified $9 billion in need over the next decade. Governor, welcome back to the program.

Governor John Hickenlooper: Glad to be back. 

RW: We spoke Monday to legislative leaders from both parties, and they say they're willing to do this, bring something to the ballot. That said, voters in Colorado have a long history of turning down requests for new money. What do you think would make November any different? 

JH: They're are couple of key things. As I've gone around and listened to people around the state, I think they want a program that's going to be transparent. They're going to know exactly what they're going to get. They want to be able to hold the state accountable to here's what you promised; here's what going to get built. They want it to be bipartisan. In other words, it's not going to work if one party or the other is the only party supporting it. 

RW: It has to be. The Senate is in Republican hands. 

JH: Absolutely. 

RW: What have they told you about the need for this? So they've told you what they need of it. 

JH: You don't have to go very far from the state capitol to encounter people that are living in gridlock trying to get to and from work every day. It's not just in metro Denver. It's up and down the front range and even in parts of rural Colorado. 

RW: Are there specific projects you'd want money to go to?

JH: We've been talking for several years about the priority of fixing I-25 by making sure that from Wyoming down to New Mexico, we don't suffer the traffic jams. You drive from Denver to Fort Collins at 1:30 in the afternoon on most days and it's bumper to bumper. Same thing from Denver down to Colorado Springs. We've outgrown our infrastructure, and so far we've been unwilling to step up and make the investments. Which if you look to the west, Utah, there's a state that's roughly half our size, and they are spending four times what we spend in terms of adding capacity every year. 

RW: Do you think that this might be a solution to I-70 mountain traffic? 

JH: I think that's got to be part of it as well. It's an essential element of what attracts people to Colorado, whether you're skiing or biking in the summer. Right now it's such an unpleasant experience on a Friday afternoon or even on a Saturday morning to get up to the mountains. And then getting back on Sunday afternoon or early Monday morning, it can be just as bad. 

RW: Would you want to see something on the ballot that asks for $9 billion in sort of one fell swoop, or do you think that you go to voters with a smaller number?

JH: I think you go to the voters for a smaller number. I am interested in looking at getting from the voters a much smaller number per year, but the freedom to bond against that, let's put a limited time limit on it, so it's not open ended. People in Colorado have a resistance to open ended tax measures. Let's go out there and get an annual revenue stream that allows us to deal with the most critical infrastructure shortage we have. 

RW: I want to talk to you about building more highway capacity. So I think of my drive which is down I-25 between Denver and the Tech Center. That got expanded a while back in a project called T-Rex, and for a hot minute it made a difference and now it just seems as bad and as intractable as it always was. There will be people listening who say you can't build highways to solve this problem. It's got to be about transit. It's got to be about alternative forms of transportation. What do you tell them about this potential package on the ballot?

JH: Well, I agree with them. If you look at the expansion of I-25 south of Denver, it has Light Rail along it, but that Light Rail isn't fully built out yet. When people say, "Well, as you head south during rush hour, it's still too slow, and the traffic is too constricted." Yeah, I would agree. We need to continue to look at how do we relieve some of that pressure. But the bottom line is it is a thousand times better than it would have been if we didn't have Light Rail and if we didn't have that extra lane. 

RW: What kinds of transit or, I don't know, support for people who bike or walk, could there be in this package? 

JH: Well, we're trying to connect bike trails and others. We already have a huge number of bike trails in metro Denver, but not all of them are connected so that people can use them as commuters. The other side with the light rail, most people have 10 or 15 blocks to go from the station to where they work. Well, that's an actually relatively inexpensive part of the equation to really find a solution for. So part of it is whether it's bike sharing or a little shuttles or signing a contract with Uber or Yellow Cab, however we do this, if we can solve that part of it, all of a sudden a lot more people start using Light Rail. Those transit users are getting out of the way of people that don't have the freedom not to have their car. It really does become a partnership. 

RW: So addressing what's been called the 'last mile' problem there. Many of you answers there are focused on the metro area. What's in this for rural Colorado? They'd have to say yes to this too presumably. 

JH: Well, as I've already mentioned, I-25 goes all the way from Fort Collins, north of Fort Collins, all the way down through Colorado Springs and down into Pueblo. The congestion is that entire length of I-25. If you look at what's going on in Utah, they have roughly the same distance between Provo and Ogden, and they have six lanes the whole way, and for a large portion they have eight lanes. Well, we only have eight lanes in a very small portion, and there are still large stretches where we are reduced to four lanes. That affects everybody. 

RW: Anything on the West Slope? 

JH: Yeah, I think if you look at Durango and even parts of Grand Junction, they have congestion at certain times. In rural parts of Colorado, I think their share of the money will be more likely used to bring some of their rural highways back up to a reasonable sense of maintenance. In other words, they've slipped behind over the last 10 or 20 years. While they may not have as much traffic, most of the rural folks I talked have complained about potholes and road condition that affects how often they get their wheels aligned and that kind of thing. 

RW: So the question is how to raise more money for transportation, what is the mechanism. There has been suggested a sales tax. Some have talked about a tax per mile traveled. Another is raising the gas tax, which is just not generating what it used to. Do you have a preferred measure and as you've talked to law makers, because we know there have been discussions going on, do they seem to be gravitating towards one more than another? 

JH: I've had discussions with both the president of the Senate, Kevin Grantham and the Speaker of the House, Crisanta Duran. I think there's a willingness to listen and try and figure out what is it the people of Colorado want. Municipalities generally frown on the state raising the sales tax because municipalities invest their sales tax, their share of it, as a critical part of their revenue source. 

RW: Income tax? 

JH: I think that's possible. I think gas tax is possible. I'm not ruling out sales tax. I'm just saying there are pros and cons with each one.

RW: You've not come to a decision it sounds like. 

JH: Oh, no. Not at all. I think this is going to be a big part of the first month or two. I think it's very encouraging that Speaker Duran and President Grantham are already engaged in discussions with each other, with the governor's office. We're all working to try and figure out what is the right balance. 

RW: I think another big question is going to be whether this tax replaces another tax that is removed, or is it an entirely new tax. Republicans for instance have floated the idea that you might put in this tax and then remove the gas tax. 

JH: Sure. 

RW: Let's say if it were a sales tax. 

JH: Again, I'm open to any of these options. In the end, the key is we have to make sure that there's strong public sentiment behind it, and that the General Assembly is going come around and support it strongly. Not just referring the measure to the ballot, but when it's being discussed in their local districts, are the members of the General Assembly going to come out and support it, and tell people, "Hey, we've got, we're in a real pickle. We don't have the infrastructure we need, and this is the best way to solve it." 

RW: In previous sessions, you've pointed to another solution for transportation and education funding. It's something called the hospital provider fee. It's a reclassification of a fee. It has to do with its relationship with TABOR, the Taxpayer Bill of Rights. This has for Republicans been a non-starter. Does your interest in a specific transportation tax mean that you're saying good-bye to the hospital provider fee? 

JH: I wouldn't say that. I think that the hospital provider fee, if it were appropriately classified as a fee, which it clearly is, right? The present Attorney General says it's a fee. John Suthers, the previous Attorney General, both Republicans, they both agree that it is a fee.

RW: The Senate President says this is a non-starter. 

JH: Well, that's okay. I respect where he's coming from. Obviously there's been a lot of pressure on him. I don't know whether it's donors or his constituency saying that. We looked at the-

RW: It might be his beliefs. 

JH: It might be his beliefs, but I think it's always worth discussing. If anything, it's more incumbent upon me to listen harder to what his objections are. 

RW: So the issue isn't dead in the water, but it sounds like it's not going to be your major vehicle for funding transportation. 

JH: Right. It certainly doesn't look like it's leaping into the wild blue yonder. 

RW: I will say the highest ranking Democrat in the Senate, that's Senate Minority Leader, Lucía Guzmán, says she still wants to take that fee out from under TABOR to free up money. She's working on a bill to do it. A question about the state budget aside from this possible transportation tax. Your proposal is an operating budget of about $11 billion, a 4% increase but $500 million less than what you say the state must spend. Some Republicans have suggested Medicaid spending could be cut. What are your thoughts about that?

JH: Well, everybody's got their own suggestion. Now, if you're going to cut Medicaid the devil's in the details.

RW: Do you see places in Medicaid that could be trimmed?

JH: Yeah, I think there are clearly some places that we will look at aggressively. I think we want to include both Republicans and Democrats to say this is not in anyone's best interest to continue having medical inflation at a level that's far beyond the normal inflation that seems to affect every other part of our daily lives.

RW: I want to talk about what the Trump Administration and the Republican Congress could mean for healthcare in Colorado. Efforts to dismantle Obamacare have begun in Washington. At the same time there seems to be a lot of interest in getting insurance through the state's exchange. Open enrollment ends January 31st and as of about the end of December sign-ups were ahead 18% over last year.

JH: Well, we are going to do everything we can to preserve people's choices and to make sure that the success we've had in expanding coverage is maintained.

RW: Some will argue that their choices have dwindled under the ACA. 

JH: And that's fair to say. I think there certainly will be some modifications to the Affordable Care Act that will hopefully restore some of those choices that were taken away. I think the key with Trump, A, first, I don't think most Coloradans want Congress to be in charge of their healthcare. When I've been around talking to people I hear it again and again. As much as they were frustrated and hated the Affordable Care Act, they're very concerned about what Congress is going to make, some kind of snap shoot from the hip decision and that they're going to end up in a worse place than they are now.

RW: So what kind of discussions are going on in your administration right now about this?

JH: We have a discussion every single day. We're looking at how to make sure the Exchange remains viable. A lot of that has to do with volume, the more volume that goes through it. We've talked about reaching out to some of our neighboring states that don't have exchanges and they're less than enchanted with what they get from the federal exchanges. Maybe should have a regional exchange which would again lower costs, might be useful to everyone.  A lot of the success of an insurance company is combining pools, to get to a larger pool generally helps the outcomes for everyone.

RW: So you talk about potentially creating a regional exchange. I want to talk about a federal audit of the Exchange in Colorado as it exists today. The federal auditors recommended Colorado pay back almost $10 million, saying that money was either misspent or not correctly accounted for. What's the deal here?

JH: Well, I think the auditors were talking to the Board, I think it was just this week. I don't think there's any question of the money being misspent or in any way malfeasance. I think the way that the money was accounted, in other words, the amount of paperwork, wasn't satisfactory.

RW: Some of this had to do with proving that people deserved bonuses.

JH: Again, that paperwork of demonstrating, here's what the criteria were, here's why this person got, and these were small bonuses, these were not by any sense large.

RW: You're saying this was a paperwork error.

JH: Yeah, I think it is largely a paperwork error. From what I understand, I'm not sure that in the end that $9.4 million or the full $9.4 million will have to be recovered. At least as I understand it, I think there's a legitimate chance that the vast, majority of that, that paperwork will be found to be, "Well, it's not perfect but it's okay.'

RW: Your annual address to the legislature, the State of the State Speech is Thursday. Give us another legislative priority you'll raise in that speech.

JH: Well, wait a second. If I give you my legislative priorities, who's going to come listen to this speech? 

RW: Well, they'll all have listened to Colorado Matters.

JH: That's exactly my point, so they won't come, they won't tune in their TV sets.

RW: No preview?

JH: Well, you know the preview already. We've been quite clear I think that transportation infrastructure, all forms of infrastructure; broadband, education, our workforce training. Are we doing as good a job for those 70% of our children that are never going to get a four year college degree, are they getting a fair shot at a good life, a job that leads to a better job that creates a career? We're going to focus on that stuff.

RW: When I spoke with the Speaker of the House, Crisanta Duran, and the Senate President, Kevin Grantham on Monday, they raised another issue and it's shorthanded as construction defects legislation. Changes that, among other things, would make it harder for homeowners to sue builders. Supporters say it's so easy right now that builders can't afford to build and so housing prices are going up. There aren't as many condos as would normally be available. Opponents though say changing these laws opens the door to shoddy construction and little recourse for the people who occupy it.  First off, do you see construction defects even as related to affordable housing?  I just want to explore your thinking there because that's not an assumption all people make.

JH: Sure, and I don't think the connection is as direct or impactful as some people say but I think there is a clear connection. But I refuse to believe that there's not a compromise that doesn't stimulate the construction of condominiums but at the same time provide consumers with necessary protections.

RW: Do you think that this is the year to pass it because it really has been tough in previous sessions?

JH: I think it was all but nailed out in the last couple days and we couldn't just get it over the finish line at the end of the session last year. I'll be very surprised if we don't get it this year. This would be one of those things that if we don't find the right compromise I will be excessively frustrated, even more frustrated than I normally am. There's always a certain low level kind of white noise frustration in this job.

RW: You did an interview with Bloomberg News last month and you were asked about President-elect Trump's involvement in some business issues. His effort to keep Carrier from moving jobs overseas, his Twitter complaints about Boeing's contract for Air Force One. You said Trump probably won't have time to keep doing that but you went on to describe your own relationship with Colorado businesses. Here's what you said:

[plays recording of Governor Hickenlooper]
JH: Certainly in Colorado I try to make sure that I am aware of all the larger companies, the large employers, and if they've got an issue or a challenge they've got my cell phone number, they'll call me and we try to work it out. I think in most cases those companies are trying to get what's fair, they're not trying to hoodwink anyone or get out of paying their fair taxes. 

RW: Give me an example of a company that has called you in that way with an issue and how it was resolved.

JH: Oh my gosh. I mean, when we had a tax issue, I can't remember, I think it was last year, that it was going to increase the way we tax personal property. I'd have to go and find exactly what the tax was, but I'll bet I had ten phone calls. That's not just the big companies that had my cell phone, right, I come from the world of small business. There are lots of restaurant owners and small, little manufacturing companies. Probably the dumbest thing I've done was give my cell phone to too many people. The one nice thing is I don't have to worry about any, that I'm not hearing people's opinions. It's from both sides, it's not just from the minimum wage. When the minimum wage come up the big companies called, the small companies called, but also, a bunch of friends. I have a couple friends who work for supermarkets, they're part of organized labor. They called telling me I'd better support it. It's the way it's supposed to work. 

 I like getting out on weekends. I was in King Soopers, I was over in Jefferson County.  This is probably Sunday at four o'clock in the afternoon. I had to have my picture taken with the assistant manager and a couple of the other employees in the King Soopers. Then I had no less than ten people come up and six or seven of them said great job, thank you for your public service. Then three or four people said, "Hey, but what about this, and how come you supported that and can you explain this to me?"  I'm one of those people, and maybe it's part of being dyslexic, but rather than reading something and thinking about it I think more clearly when I'm having a discussion about a specific issue.

RW: Governor, thanks for being with us.

JH: Sure, anytime.

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