Adam’s Blog

That’s my thing, keepin’ the faith, baby. –Joe Friday

Garvee: That’s What It’s All About

Posted by Adam Graham on April 13, 2009

As I prepare my Idaho Conservative Scorecard, I’ve been asked whether I’ll include votes on the gas tax increases. The answer at this point is no. Conservatives are legitimately divided over whether to raise taxes to pay for needed infrastructure maintenance.

This does not mean the Transportation Issue will not be on the scorecard, but one vote will receive attention, S1186, the GARVEE bond bill. The scorecard will have an Idaho Conservative position of “no.”

First, understand how GARVEE works. GARVEE pays for big road construction projects now by borrowing against future infusions of gas tax revenue from the Federal Government. According to estimates, if Idaho took out the full $998 million that have been approved in GARVEE bonds, we’d owe $77 million a year in debt servicing for 20 years that would be taken out of our federal highway funds.

The GARVEE bonds have exacerbated our existing problems with falling behind on road maintenance. Right now, we have $584 million in GARVEE bonds out before the legislature added on $82 million more in GARVEE bonds. That would amount to 58% of the total, which would mean the cost of servicing that debt amouns to $45 million.

Each penny of Gas Tax increase produces $7.4 million in, so in essence, the money taken away from highway maintenance for Federal GARVEE payments is equal to six cents in Gasoline Tax. Issuing more GARVEE bonds is going to mean even more Federal Gas Tax Revenue diverted away from paying for the basic maintenance we need done.

There’s an old saying, “When you find yourself in a hole, stop digging.”  Instead, facing short falls in basic maintenance, the legislature dug a little deeper, guaranteeing increasing shortfalls in our maintenance budget for the next two decades.

Rep. Leon Smith (R-24) compared GARVEE to building roads with a Credit Card. It’s even worse than that. GARVEE is like using a Credit Card to expand your House when you can’t pay your mortgage. As you continue to borrow money on your Credit Card, it takes more to make the minimum payment and you have even less to put on your mortgage.

GARVEE makes sense or would at least be a reasonable risk if the state were flush with Highway Revenue. Then the argument made by Rep. George Eskridge (R-3) that the state is saving a lot of money on inflation by spending money now rather than paying later at inflated prices would be feasible.

 Instead, we face a backlog of transportation maintenance and GARVEE is only deepening the problem. We have not come up with a reasonable way to fund Transportation, so we cannot afford to continue to borrow our future Federal Gas Tax payment. We need that money.

If, as Governor Otter has stated we have a crisis in the maintenance of Idaho’s roads, we need to put GARVEE on hold until we’ve found a way to pay for transportation that is practical and sustainable. Until that time, future GARVEE obligations are not responsible fiscal policy.

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