Gov. Jared Polis on Wednesday touted a new agreement between the BNSF Railway and the Front Range Passenger Rail that would deliver three daily round-trip passenger trains between Denver and Fort Collins with no new taxes and at about half the cost of earlier estimates.

But a measure possibly headed for the November ballot could take away the very revenues the project is counting on.

The agreement, approved Wednesday by the major transportation governing boards, would provide starter passenger rail service by January 2029.

It calls for $330 million in capital improvements, funded with $156 million from the Regional Transportation District’s FasTracks savings account and $176 million from the Colorado Transportation Investment Office. Annual operating costs of roughly $30 million would be split among the partners.

The agreement is non-binding and remains subject to final contracts that the parties aim to complete by June 15.

Polis called the deal a major step forward.

“Today’s agreement is a big step towards delivering three daily round trips between Denver and Fort Collins, giving Coloradans transportation options to save us time and money, while reducing traffic and pollution,” the governor said in a news release. “With no new taxes, and at nearly half the cost of previous studies, this agreement proves that through partnership and collaboration, passenger rail service across the Front Range is not a far-off dream, but a reality.”

BNSF Assistant Vice President of Passenger Operations Jim Tylick echoed the optimism.

“BNSF is proud to take this important step with the state of Colorado, moving us closer to bringing new intercity passenger rail service to communities along the Front Range,” Tylick said in the release.

Yet the same day the boards voted to advance the project, backers of a separate constitutional amendment — Initiative 175 — continued gathering signatures. If it makes the ballot and is passed by voters in November, it could fundamentally change how those revenues can be spent.

Legislative Council Staff analysis shows that Initiative 175 would direct roughly $2.09 billion in existing state revenues each year exclusively to “road transportation,” defined as building and fixing roads and bridges, safety improvements, related planning and engineering, and Colorado State Patrol operations.

Of that total, about $1.395 billion (66%) already comes from the Highway Users Tax Fund, which is statutorily dedicated to highways. The remaining $538.9 million (26%) consists of General Fund vehicle sales and use taxes and certain transit-related cash funds — including the daily vehicle rental fee that is a cornerstone of the rail project’s financing.

The Legislative Council Staff explicitly listed the daily vehicle rental fee among the revenues that would be captured: $22.0 million in the half-year fiscal year 2026-27 and $45.6 million in fiscal year 2027-28. It also noted that transit-related funds would be affected “as an upper bound,” meaning public spending on other transportation-related services such as public transit would decrease.

If Initiative 175 passes, the rental car fee revenue and other Colorado Transportation Investment Office and transit enterprise funds now earmarked for the rail project’s capital and operating costs would be constitutionally locked to road-only uses. The General Assembly would lose the flexibility to direct those dollars to passenger rail.

The initiative, cleared for signature gathering in December, would take effect Jan. 1, 2027, if approved by voters in November.

Supporters of Initiative 175 argue that the change simply returns user fees to their intended purpose.

Opponents, including a broad coalition of 46 lawmakers and more than 43 organizations, contend the measure would force painful trade-offs in the General Fund.

An April 14 letter from Keep Kids First Colorado — the group leading opposition to the initiative, from education, hospital and environmental groups — stated that balancing the budget without major reductions to Medicaid, K-12 education and higher education would be nearly impossible if the initiative passes.

The Legislative Council Staff has projected the redirection of $538.9 million from the General Fund. This amounts to about 3.1% of the state’s $17.4 billion discretionary General Fund.

An April 14 letter from Keep Kids First Colorado — the group leading opposition to the initiative, from education, hospital and environmental groups — stated that balancing the budget without major reductions to Medicaid, K-12 education and higher education would be nearly impossible if the initiative passes.

Meanwhile, Tony Milo, president and CEO of the Colorado Contractors Association, which is behind the initiative, said the Polis administration’s numbers are inaccurate.

“The Polis administration is using scare tactics that aren’t grounded in reality to try to turn voters away from Initiative 175,” he said in a statement.

In fact, Milo said, the proposal dedicates just 2% of the state budget for road repair and maintenance. He maintained it doesn’t raise taxes. He also said the proposal does not use enterprise fees, nor does it take money away from transit, registration or rental car fees, or other unrelated funding sources.

“The only state revenue used to fix Colorado’s crumbling roads with the passage of Initiative 175 comes from sales tax on vehicles and motor vehicle parts and fuel taxes,” he said.

The Legislative Council Staff has projected the redirection of $538.9 million from the General Fund. This amounts to about 3.1% of the state’s $17.4 billion discretionary General Fund.