The money would wrap up work on U.S. Highway 95 from Garwood to Sagle in north Idaho and Idaho Highway 16 from I-84 to Emmett in southwest Idaho. ITD has spent $82 million buying land and planning for the two projects.

“This caps and completes the investments on those two pieces by actually constructing them,” said Sen. Shawn Keough, R-Sandpoint.

Sen. Joyce Broadsword, R-Sagle, said the funding would finish the job. She also said the Garwood-to-Sagle funding would help expand capacity on the highway as well as make travel safer. “We have people getting killed there on an annual basis,” Broadsword said.

The GARVEE program issues bonds for construction projects, which are then repaid by future highway construction money from the federal government. In the next budget, ITD is expecting to pay $50 million in debt service on current GARVEE bonds, $4 million of which comes from state highway construction money, which comes from the state gas tax and vehicle registration fees.

The Joint Finance-Appropriations Committee approved issuing additional bonds on a 17-3 vote. If the House and Senate approve the plan, GARVEE would have received $854.6 million in bonding authority.

Four GARVEE projects have already received all the funding authorization they need, according to ITD, and the $162 million would wrap up the final two projects. “This finishes all of the projects that have been approved to date,” said Darrell Manning, the chairman of the Idaho Transportation Board, which oversees ITD.

When GARVEE was created, it had the authority to bond $998 million, so there’s more than $143 million that could be bonded. Manning said that all six corridors could be further improved, but any new projects would need to be approved by his board and lawmakers.

ITD Director Brian Ness was happy with JFAC’s vote, saying it would be fiscally irresponsible to not fund construction on projects that have already been planned.

Sen. Nicole LeFavour, D-Boise, was one of three lawmakers to oppose the additional bonding. She said Idaho will be missing a good chunk of its federal transportation money for many years, and that ITD will need to continue widening freeways until the state expands public transportation options.

The four other GARVEE projects are on U.S. Highway 95 near Worley in north Idaho, two projects on I-84 in southwest Idaho, and U.S. Highway 30 from McCammon to Lava Hot Springs in southeast Idaho.

The GARVEE borrowing plan must now be approved by the Idaho House and Senate as well as Gov. Butch Otter. Wayne Hammon, Otter’s budget chief, said during the JFAC meeting that the governor supports the plan, saying it’d be shortsighted to not complete the two projects that have already received investments.

The Idaho Transportation Department wants to spend $162 million on the Grant Anticipation Revenue Vehicle (GARVEE) in the next fiscal year. Rep. Leon Smith, R-Twin Falls, said adding that amount to the $657 million already spent could create a catastrophe down the road.

“At some point, we’ve got to say enough is enough with GARVEE bonded indebtedness,” Smith said Thursday. He called the GARVEE program “stimulus by debt,” since it creates transportation jobs, but requires future payments from money for Idaho roads. ITD says GARVEE has created or sustained 11,400 jobs.

The main concern for Smith is that Idaho’s share of federal road funding could drop, as Congress prepares to reauthorize its national highway spending plan. If Idaho ends up getting less money from the feds, the share that GARVEE payments take up could eat up money for other new projects, including replacing aging roads and bridges.

A recent report from the Congressional Budget Office, which tracks federal spending, found that the trust fund used to make payments has run out of money three times since 2008 and could be unable to meet its obligations during the next fiscal year.

Smith’s Senate counterpart, Sen. Jim Hammond, R-Coeur d’Alene, backs the additional GARVEE spending. The $162 million could wrap up ITD’s six projects that are part of GARVEE, and Hammond said ITD should be allowed to complete the job. In 2006, lawmakers approved using $998 million in GARVEE bonds to fund critical improvements of six transportation corridors: U.S. 95 from Garwood to Sagle, U.S. 95 from Worley to Setters, I-84 from Caldwell to Meridian, I-84 from Orchard to Isaacs Canyon, Idaho 16 from I-84 to South Emmett, and U.S. 30 from McCammon to Soda Springs.

“It makes no sense not to finish out the project now,” Hammond said. He also said the project has been a success, since ITD has gotten good rates for its projects, due to the downturn to the construction industry during the recession. He compared the borrowing plan to buying low on stock, since the cost of roadwork will likely increase.

Hammond agreed with Smith that there is some uncertainty about the future of federal funding, which is why lawmakers should hold off on any new bonding for roadwork once the GARVEE projects are finished.

Hammond and Smith spoke to the Joint Finance-Appropriations Committee (JFAC) Thursday. That committee, which writes the state budget, will cast the first vote on whether to allow ITD to borrow more money. Last year, lawmakers on JFAC cast several split votes before lowering ITD’s request for GARVEE bonding from $26 million to $12 million.

Obama held a news conference Wednesday in part to discuss his latest efforts to boost the economy.  Besides the $50 billion for roads, rails, and airports, the president also wants to increase a business tax credit for research and development and make capital investments fully deductible until the end of next year.

“This will help small businesses upgrade their plants and equipment, and will encourage large corporations to get off the sidelines and start putting their profits to work in our economy,” Obama said at the news conference about the tax incentives.

Crapo said he supports the principle behind some of the president’s economic proposals.

But, Crapo added that the money for transportation projects would need to be paid for.  Like Sen. Jim Risch and Rep. Mike Simpson, he said it could be better not to spend federal money.

Crapo said the U.S. shouldn’t rack up billions more in debt to boost the economy in the short-term.  He said spending that requires the U.S. to borrow money would be a burden in the future.

Crapo is serving on a presidential commission tasked with finding ways to lower the national deficit.  That commission will have its recommendations ready by December.

Crapo and the rest of Idaho’s delegation in Congress will return to Washington, D.C., next week, where they will tackle Obama’s economic proposals and other issues.  The U.S. House has a target end date of Oct. 8, giving its members time to campaign before the November elections.

Obama proposed spending $50 billion on roads, trains, and airports and increasing tax incentives for businesses to spend on capital investments as well as research and development projects.

Rep. Mike Simpson and Sen. Jim Risch are opposed to the extra transportation spending, though Risch said the business tax credits have some merit.

Risch’s spokesman, Brad Hoaglun, said Risch wouldn’t back the new money for transportation projects.  “To spend $50 billion that we don’t have is a non-starter for him,” Hoaglun told IdahoReporter.com.

However, Hoaglun said the tax breaks for businesses, separated from the spending, could easily pass the Senate.  “That’d be a good way to get the private sector to start creating the jobs, as opposed to borrowing the money and dumping it into the economy.”

Obama’s proposal would make the research and experimentation tax credit permanent and increase it from 14 percent to 17 percent.  He also wants certain capital investments, which could apply to construction projects and other spending, to be fully tax deductible until the end of 2011.

Simpson said that House Minority Leader John Boehner of Ohio has better ideas for fixing the sluggish economy.  “John Boehner said it well when he challenged the President to heed the advice of his own budget director to not increase taxes,” Simpson said in a prepared statement.  “I am not entirely sure why the President continues to believe that increased spending and increased taxes are an appropriate path forward when the American people clearly believe they are not.”

Boehner and other Republicans are offering a “two-point policy” of reducing non-security federal spending to levels from 2008, and freezing all tax rates for two years.  House Republicans have said not freezing taxes would kill job creation.

A White House official called Boehner’s tax policy irresponsible and said it would provide the most benefit to millionaires and billionaires.

The U.S. Chamber of Commerce, representing business interests, opposes the tax incentives for businesses.  “This doesn’t quite live up to the White House hype,” the Chamber’s Pat Clearly wrote on the ChamberPost blog.  “Taken together, they are of dubious job-creating value, but worse yet, the ultimate burden to business – tax and otherwise – will far exceed any benefit they may bring.”

Representatives for Sen. Mike Crapo and Rep. Walt Minnick said each will need more time to study Obama’s proposals before commenting on their merits.

Photo courtesy of the White House/Chuck Kennedy

The Idaho AGC and its national political arm, the Associated General Contractors of America Political Action Committee, has endorsed and financially supported several Republicans that represented Idaho’s 1^st Congressional District in Congress, including now-Gov. Butch Otter, the late Helen Chenoweth, and Bill Sali, who Minnick defeated in 2008.  The national group has also made contributions to Idaho’s three Republicans currently in Congress, Rep. Mike Simpson and Sens. Mike Crapo and Jim Risch.

AGC leaders said they chose Minnick over Labrador for several reasons.  AGC Board President Burke Hansen said Minnick has served Idaho businesses well.

Hansen also said the Minnick’s stances against new federal health care laws and in favor of reauthorizing federal highway funding aligned with the AGC’s views.

Unlike Minnick, AGC supported the 2009 stimulus plan, because it would provide work for contractors in Idaho.  Hansen said the group didn’t pick Labrador in part because of his opposition to Otter’s proposal to increase transportation spending by raising the gas tax and vehicle fees.  That program would have also meant more money for contractors.

AGC Executive Director Mark Dunham said the association makes endorsement based on the candidates running, not their party affiliation.  He said Minnick has been proactive in finding solutions and proved that he deserves AGC’s support.

Labrador said AGC pick of Minnick shows that it isn’t concerned about the best interests of the U.S.  “The endorsement made by the Associated General Contractors today shows that they are in favor of raising taxes to fund the liberal spending policies of Minnick and his Democrat friends, even in the middle of a recession,” Labrador said in a news release.  “I am not only against that, but I will fight for the interests of Idahoans.”

Minnick said he was flattered to receive the group’s endorsement.

Minnick said he will work to try to increase Idaho’s sagging construction market.  “The problem with jobs in America isn’t a partisan issue—it’s a problem for everybody,” he told IdahoReporter.com.

Minnick said he supports finding more money to maintain state roads, though didn’t endorse any specific plan, such as raising the state gas tax.  “It’s a critical problem that needs to be dealt with,” he said.  “How the Legislature and the governor choose to deal with it is up to them.”  He said the state needs to spend $200 million on road maintenance annually.  That’s higher than an estimate from Keith Allred, the Democratic candidate for governor, but more in line with Gov. Butch Otter’s projections.

Minnick has picked up endorsements from other organizations and individuals that often lean toward conservatives, including the U.S. Chamber of Commerce, and some leaders in the dairy and cattle industry.

Hansen said Minnick fits AGC’s business perspective.

Sen. Dean Cameron, R-Rupert, said the Legislature is backing off after further study of the issue. “We felt like we had gone too far last session,” he said about removing the funding for state parks. The $4 million for parks comes from gas sales to off-road vehicles, and is spent maintaining off-road trails. “We had reached an agreement that made a lot of sense.”

“It really made more sense to leave that funding in place,” said Sen. Jim Hammond, R-Coeur d’Alene. “It was a very clear pathway between how the funding was generated and how it was spent.” Hammond and Cameron said they’ve identified several new funding sources of $16 million for ISP, needed to offset losing the gas tax money. However, they said they are waiting for suggestions on additional funding for ITD to build and maintain roads. A task force is scheduled to come up with new recommendations for finding new highway money in December.

“Difficult decisions are coming up,” said Sen. John McGee, R-Caldwell, a member of the task force and chair of the Senate Transportation Committee. “Our roads are not getting any better, and every year we fall further and further behind. Not in expansion of our roads, but in maintenance of our roads.”

Read IdahoReporter.com’s first story on the delay in switching gas tax funding here. The text of the legislation is available here.

“You may recall that transportation was a little bit of an issue last session,” said Sen. Dean Cameron, R-Rupert.  Transportation funding was one of the reasons for last year’s long session in Boise.  Lawmakers approved a plan to remove ISP and IDPR from the gas tax, which would shift $20 million to highway construction.  Cameron was part of a task force of lawmakers charged with finding alternate funding sources for police and parks.  For now, that task force agreed that the two state agencies should keep receiving money from the gas tax.  “We hope when we find additional funding for transportation, we can tag on and find additional funding for Idaho State Police,” Cameron said.  The task force recommended reinstating gas tax funding for state parks permanently.

“I thought this was such a poor idea last year, so that’s why I’m glad it disappeared,” said Sen. Chuck Winder, R-Boise, in support of the delay.

Senate Transportation Committee chair John McGee, R-Caldwell, said lawmakers can’t put off finding more money for roads for much longer.  “I believe that the Legislature is going to have to face this issue again, and face it in the near future,” he said.

The proposal now heads to the Senate for a full vote.  The text of the legislation is available here.

“It was pretty much what we expected,” Idaho Transportation Board chair Darrell Manning said. The Joint Finance-Appropriations Committee (JFAC) set a $483.6 million budget for ITD for the next fiscal year, which starts in July. That would be $54.9 million below their current budget, according to legislative budget numbers. “They were cuts due primarily to income,” Manning said. “We’ll live with what we get.”

“I think it’s our job to look at this budget and be as frugal as we can,” said Sen. Jim Hammond, R-Coeur d’Alene about the transportation budget. “We don’t think any agency gets a free pass.”

Lawmakers set the reduced ITD budget with little debate until they discussed Grant Anticipation Revenue Vehicle (GARVEE), which issues bonds for ITD for work on six road construction projects across Idaho. ITD has bonded $681 million since 2006, and wanted authority for $26 million more in the next year. After three split votes, legislators on JFAC agreed to grant $12 million in bonds.

Rep. Frank Henderson, R-Post Falls, tried to trim it $11 million. He said the extra $15 million would go to a construction project from Garwood to Sagle in northern Idaho that likely wouldn’t start work until next year. That means that if ITD issued the bonds, they’d start piling up debt without and roadwork to show for it. “If my arithmetic is correct, it is costing the state in excess of $200,000 a month,” Henderson said. He added that he’s frustrated that some GARVEE roadwork is being held up by federal environmental impact studies.

Sen. Joyce Broadsword, R-Sagle, said those road improvements are needed. “Those are sections of highway that are dangerous that we have people getting killed on too often,” she said. “We need those intersections done as soon as possible, and I cannot support further delay.”

Regionalism played a part in the votes for GARVEE funding. Since the bond money would have gone to improvements in north Idaho, some JFAC members like Broadsword and Hammond were in support of more money. However, other north Idaho lawmakers, like Henderson and George Eskridge, R-Dover, favored less GARVEE bonding. Lawmakers in south Idaho tended to favor less funding, though there was not a clear geographic split. After two unsuccessful votes, JFAC co-chair Sen. Dean Cameron, R-Rupert, said he hoped to find some agreement. “We can sit here and find that magic number where both sides of the north can agree with one another,” he said.

Some JFAC members said no in all votes for GARVEE bonding, opposing adding to the state’s debt payments in the future. “We’re going backwards on this,” said Rep. Jim Patrick, R-Twin Falls. He said lawmakers should find new revenue to pay for GARVEE bonds, such as raising the gas tax. “If we could raise money to pay the debt service, I guess I could agree to it.” An effort to raise gas taxes failed in the Legislature last year.  Sen. Nicole LeFavour, D-Boise, also spoke against adding more bonding and debt for roads during the JFAC meeting.

Ultimately, JFAC approved the $12 million in bonding authority on a 12-8 vote. ITD would also be instructed to spend that bond money on right-of-way land acquisition for new or improved roads before funding construction projects. During the last few years, JFAC told ITD that construction was the top priority. In addition to the Garwood-to-Sagle projects, GARVEE is also funding construction work on U.S. 95 from Worley to Setters in north Idaho, U.S. 30 from McCammon to Soda Springs in southeast Idaho, and three projects along I-84 in southwest Idaho.

“There’s pretty good consensus that we need additional revenue,” said Lt. Gov. Brad Little, who leads the task force. He said there was another point of agreement among the panel of lawmakers, state officials, and private sector transportation experts. “There was good general consensus that federal funding was probably not going to be our salvation,” he said.

“I’m a little bit surprised that by and large there’s a lot of agreement,” said Sen. John McGee, R-Caldwell, who sits on the task force and leads the Senate Transportation Committee.

Little responded to McGee that plenty is still up for debate. “There’s agreement on where we’d like to end up,” he said. “There’s not agreement on the hurdles we have to go through to get there.”

The survey also found that task force members think the Idaho Transportation Department (ITD) and local highway districts will need to find an additional $59 million for transportation improvements and preservation on top of the $211 million that is currently spent.

The task force is set to issue recommendations for roads funding in December, but it’s unclear where the money will come from. “We’re reluctant to do anything that puts further stress on the businesses of our state,” said Rep. JoAn Wood, R-Rigby, the House Transportation and Defense Committee Chairman. Otter created the task force after his proposed tax and fee increases for road funding died in the Legislature last year.

“I would think it wouldn’t hurt to begin to explore potential funding sources,” said Rep. Bill Killen, D-Boise. “The limiting factor is going to be the funding not the needs.” The task force will next meet in April.

“It’s looking very, very serious for us in the future,” said Rep. JoAn Wood, R-Rigby, the chairman of the House Transportation and Defense Committee. “I don’t want to go any further into debt.” She told the Joint Finance-Appropriations Committee (JFAC) Thursday that the debt service payments for GARVEE bonds will last for 20 years and adding more bonds will only lead to higher payments down the road. The $26 million that ITD is requesting in its next budget would help buying land for roads on U.S. Highway 16 and on construction projects on U.S. Highway 95 between Sagle and Garwood.

GARVEE bonds are designed to help ITD on six road construction projects across Idaho. ITD has bonded $681 million since 2006. Money to repay those bonds is expected to come from federal grants. Wood said those federal dollars aren’t guaranteed. “If we don’t have more money coming in somewhere, we’re in a world of hurt,” she said. “We’re not going to be able to take care of what we’ve got.” According to Wood, federal changes to how road dollars are spread across the U.S. could hurt Idaho, which receives more from the federal government than it sends to Washington, D.C., in fuel tax dollars.

Wood’s counterpart, Senate Transportation Committee Chairman John McGee, R-Caldwell, agreed that federal money may become more scarce. “I don’t think Washington, D.C.’s in the mood to send a lot of transportation dollars to Idaho,” he told JFAC. But McGee said he supports the $26 million GARVEE bond. “This is the right time to do it,” he said. “This seems like a uniquely excellent opportunity for us to take advantage of the fact that we have construction companies that need work.” ITD said it saved $55 million in GARVEE construction costs in 2009 because of the down construction economy, though the department has faced criticism for spending $69,000 on groundbreaking ceremonies for GARVEE projects.

Lawmakers on JFAC are scheduled to decide on ITD’s budget on March 5, including whether they will have authority to issue the $26 million in bonds.