Otter urges extra care on road-building bonds

BOISE – Idaho Rep. Butch Otter – the 1st District congressman who is running for governor in 2006 – urged state lawmakers on Tuesday to take extra care with Gov. Dirk Kempthorne’s proposal to borrow money for $1.6 billion in highway projects around the state.

Otter, Idaho’s lieutenant governor from 1987-2001, made an appearance at the Statehouse to rally support from his Republican friends, to give remarks in the House Majority Caucus Room at lunchtime and to have pictures taken with supporters.

Responding to a question by Rep. Shirley McKague, R-Meridian, after a lunchtime pep talk, Otter said several state lawmakers have called his Washington office to ask about the viability of so-called GARVEE (Grant Anticipation Revenue Vehicle) bonds.

Kempthorne’s “Connecting Idaho” plan is a centerpiece of his legislative agenda this year. The idea proposes to issue bonds for highway projects and pay them off with federal highway payments in future years.

The plan would veer Idaho away from its traditional “pay as you go” method of highway financing, and fiscal conservatives have viewed it skeptically.

Otter’s remarks on Tuesday took a cautionary tone.

“When you start amortizing infrastructure that you’re building today with money that you’re borrowing in the future, you have to make sure that revenue stream is there,” Otter told about 40 lawmakers who came to hear his informal stump. “I think GARVEE bonding is a great idea and gives us a great opportunity, but I would be very, very careful about being too highly leveraged.”

Otter said of all the states that are using GARVEE-type financing for road construction, none is borrowing more than about 32 percent of its annual highway budget in any single year.

The congressman also expressed concern that while the actual road building might be paid for with bonds, adding so much infrastructure all at once will mean the roads will require lots of maintenance all at once – in about 10 years – when the surfaces begin to degrade.

Brian Whitlock, Kempthorne’s chief of staff, said he did not hear Otter’s remarks firsthand; but he defended against the notion that Otter’s comments might portray a lukewarm stance toward the concept of using GARVEE bonds for Idaho projects.