Highway proposal prompts questions

BOISE – Questions flew Wednesday when legislative budget writers got their first look at the details behind Gov. Dirk Kempthorne’s $1.6 billion proposal to fix roads around the state, including major upgrades for U.S. Highway 95.

Rep. George Eskridge, R-Dover, questioned how much of a difference having the money would make, noting that after years of review, the Sandpoint bypass project hasn’t “turned a shovelful of dirt.” Issuing bonds against future federal highway allocations, as the governor has proposed, “won’t help that,” Eskridge said.

This long delay is primarily because of “the environmental process and location process, and not necessarily the cost of the program,” the North Idaho lawmaker said.

The governor’s plan would use Grant Anticipation Revenue Vehicles, or GARVEE bonds, to allow the state to do 30 years worth of highway construction in the next 10 years. The bonds allow states to borrow against future federal highway payments, essentially by buying insurance that those future payments will show up.

Projects in every part of the state are in the governor’s plan, including building a freeway from Coeur d’Alene to Sandpoint, going to four lanes on Highway 95 from Moscow to Lewiston and adding a new route through Indian Valley at the southern end of Highway 95 that would cut a half-hour or more off the trip from North Idaho to Boise.

“This is a big step – there’s no doubt about it,” state Transportation Board Chairman Chuck Winder told the Joint Finance-Appropriations Committee.

He told the panel that the program “selected projects that are of regional and statewide significance. … We think that it will reduce crashes and accidents on the roads.”

State Transportation Director Dave Eckern told the lawmakers that if the program is approved, the first bond would be issued in January of 2006, and the final one would be issued in 2014. The last payment would be made in 2032.

Idaho has issued bonds to pay for road construction before. “In 1890, the year we became a state, Idaho bonded for roads,” Kempthorne told the Legislature this week in his State of the State address. “Lawmakers did it again three years later. Seven times since statehood, Idaho has used this tool to build roads.”

When Eskridge asked how much the bonds could save the state, as opposed to how much gets spent to go through environmental approval processes on road projects, Eckern said that was an “excellent question.”

He showed the panel figures for a hypothetical $100 million road construction project. Under normal, pay-as-you-go funding, the project would be completed in 16 years as federal highway funds came in to the state. It would incur $137.2 million in inflationary costs over that time period, because of increases in everything from construction materials to right of way, for a total cost of $237.2 million. With GARVEE bonds, the project would be completed in six years, financing would cost $58.5 million, and there would be $19.4 million in inflation, for a total cost of $177.9 million. That’s a savings of $60 million and a road completed a decade quicker.

“So we think there’s some advantage to using the GARVEE tool,” Eckern said.

Winder said the plan anticipates following all the same environmental rules as any other road project.

Other members of the joint budget committee wondered whether the governor’s plan would bring politics into the selection of road projects – something Idaho’s tried to avoid by leaving those decisions to the state Transportation Board.

“What will be the role of the state board?” asked Senate Finance Chairman Dean Cameron, R-Rupert. “We’ve now opened a process in which political persuasion … will influence which projects get approved.”

Winder said the board helped select the projects, from already identified priorities. “These aren’t just pet projects the governor selected,” he said.

Sen. John McGee, R-Caldwell, noted that Idaho Sen. Mike Crapo and then-Sen. Kempthorne helped increase federal highway allocations to Idaho when they served on a key U.S. Senate committee. Now, there’s no Idaho senator on that panel, he said, and he wondered if future highway payments could suffer.

Eckern said according to Transportation Department calculations, even if federal payments to Idaho didn’t rise at all for the next 26 years, the bond proposals would work and there’d be millions left over for other projects.

Said Winder, “You’ve protected the investor, the taxpayer is not at risk. … It almost sounds too good to be true, but that’s the way the system works.”

He and Eckern told lawmakers that the program is being designed to connect the entire state by upgrading major transportation corridors. Projects will be sized so Idaho contractors have the opportunity to bid on them.

“We think this will generate 75,000 jobs,” Winder said.

Eskridge said with a project in most lawmakers’ districts, the plan is like a Christmas tree. He expressed concern that if an environmental problem crops up with, say, the proposed freeway from Coeur d’Alene to Sandpoint, “then all at once our Christmas tree light on the tree disappears.”

But transportation officials assured him that wouldn’t happen. “If we run into a problem, we deal with the problem,” Eckern said.

He and Winder also said the bonds would be for the specific projects, and lawmakers would authorize the spending each year.

House Appropriations Chairman Maxine Bell, R-Jerome, noted that the joint budget committee won’t make the decision on whether to issue bonds – that will be up to the transportation committees in both houses, and the full House and Senate. But if the plan is approved, it will be up to the budget panel to authorize the bond payments.