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ITD disputes GARVEE criticism

The new audit suggests that the Idaho Transportation Department could be out $19.6 million due to the cost of "negative arbitrage" on future GARVEE bond issuances - the cost related to cash balances awaiting payment for project costs borrowed at high long-term rates, but invested at lower short-term rates. ITD disputes that. "The $19.6 million identified in the audit is a largely hypothetical figure based on deliberately conservative short-term and long-term interest rate assumptions in the financing model for planning purposes as of July 2008," ITD wrote in a response to the audit. "There is no assurance that negative arbitrage will exist on future transactions. ... The department chose to secure long-term financing for the major functions of projects in advance of awarding contracts to ensure that the specified work is funded and to avoid interest rate risk. This conservative approach ... protected the state from recent uncertainty in the credit markets."

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Eye On Boise

News, happenings and more from the Idaho Legislature and the state capital.