A project to create a passenger rail line between Denver and Northwest Colorado has an initial source of funding after Gov. Jared Polis on Thursday signed a bill generating the dollars. 

Senate Bill 184 allows the state to impose a $3-per-day fee on all rental cars in Colorado to help pay for transportation projects, including the mountain line. The fee, which begins in 2025, is estimated to bring in $50 million per year. 

“The promise of unfulfilled transit has gone on too long in Colorado,” Polis said at the signing in front of Denver’s Union Station. “And today, we reverse that.”

The mountain rail project would modify the already existing rail line from Denver to Winter Park and extend it to Steamboat Springs, Hayden and Craig. There are already existing tracks spanning the route, but they are used exclusively for coal freight. That rail line will continue to be used by coal producers until their scheduled shutdown in late 2028, but could be shared by a passenger rail line. 

The bill’s sponsors and Polis plan to use the funding generated by the fee to secure a chunk of the $66 billion in federal funding from the Infrastructure Investment and Jobs Act set aside by Congress in 2021 for rail development nationwide. 

The mountain rail project, a train along the Front Range and an expansion of statewide bus service would all be short-term priorities for the ongoing revenue. 

Federal grants can pay for up to 80% of a project with a 20% matching requirement.

The bill doesn’t specifically require funding to go to any of those projects because details of each of the options, including cost, timelines and service plans, are still unknown.

“To be clear, we still have a long way to go, there’s a lot of work to do to get these projects done,” said Senate President Steve Fenberg, a Boulder Democrat and a prime sponsor of the bill.  

The Colorado Department of Transportation recently selected a contractor to conduct an analysis of the mountain rail project, looking at costs, timelines and possible service plans, said Shoshona Lew, CDOT’s executive director. Lew said while Colorado is competing with other states, officials have seen a lot of interest from the federal government in funding the projects. 

“For the first phase of mountain rail, I think it’s very much in the realm of possibility that it could happen pretty quickly,” Lew said. 

In December, the federal government specifically identified Colorado as a possible recipient of dollars from the Infrastructure Investment and Jobs Act.

Polis has focused on expanding the state’s passenger train lines, saying improving mobility will also improve housing affordability. He’s also said he wants to make the Denver to Winter Park line year-round instead of just during ski season, adding multiple trips per day, decreasing the cost and even shortening the ride to the resort.

Senate Bill 190, which the legislature approved but Polis has not yet signed, also aims to make the mountain train viable by attracting businesses, using income tax credits, and having the northwest corner of the state continue using the rail line for freight. 

“The only way to make passenger rail successful is to continue to have a very healthy freight business on the mountain line,” said Sen. Dylan Roberts, a Frisco Democrat and prime sponsor of that bill. 

Republicans in both chambers opposed the idea for the rental car fee, saying it was a financial boondoggle. They’ve also criticized Democrats’ use of fees, accusing them of circumventing the state’s Taxpayer Bill of Rights, a constitutional amendment requiring voter approval for all tax increases.

House Speaker Julie McCluskie, D-Dillon, Sen. Janice Marchman, D-Loveland, and Rep. Andrew Bosenecker, D-Fort Collins, also were prime sponsors of the transportation bill.