BOISE — Much to the delight of the Idaho Associated General Contractors, a transportation funding plan was one of the first bills introduced during the 2020 legislative session.
The legislation, sponsored by House Transportation Chairman Joe Palmer, R-Meridian, seeks to shift $272 million in rainy day savings from the Budget Stabilization Fund into a new account that could help pay for state and local transportation projects.
“This builds an endowment fund that can be used to partially fund transportation,” Palmer said Wednesday, when introducing the measure.
He noted that an identical bill passed the House unanimously late last session, but it died before it got through the Senate.
“All we’re doing is getting the taxpayers’ money into a position where it can earn interest and help us out,” he said.
Palmer is a longtime advocate of using general fund dollars for transportation needs — a practice previous governors have frowned upon, but that would essentially be institutionalized under this bill.
The Budget Stabilization Fund is the state’s primary rainy day savings account. It was essentially drained during the 2007-09 recession, when it provided more than $140 million to help offset cuts to the public schools budget and other general fund agencies.
By July 1, the end of the current fiscal year, the projected balance of the fund is $393 million. Palmer’s bill would grab $272 million of that, or 69 percent, and move it into a new Economic Reserve and Investment Fund.
The bill then shifts $38.2 million from the Economic Reserve account into the Strategic Initiatives Program, which provides funding for state and local transportation projects.
In future years, any “excess” general fund revenues would be deposited into the Economic Reserve account and invested in stocks and bonds. The account could be used to cover state budget shortfalls during a recession or major disaster; however, Palmer’s bill also mandates that 5 percent of its fair market value be shifted to the Strategic Initiatives Program each year, to pay for more transportation projects.
Had the account been created last year, he said, it would already have earned nearly $17 million in interest.
“Whether we used that to build up the fund or for transportation, everyone thinks this is a good idea,” he said. “(The account balance) would still be there for emergencies, but as it builds up we can peel off money for roads.”
Like his predecessors, Gov. Brad Little has been skeptical about using general fund dollars to pay for transportation.
In his State of the State address Monday, he noted the Association of Idaho Cities and Idaho Associated General Contractors are working on an updated study of the state’s transportation needs.
“After it’s completed (this summer), I’ll work closely with the Legislature and others to formulate a sustainable funding plan,” Little said.
The governor also proposed an additional $70 million be transferred into the Budget Stabilization Fund this year. Together with other, restricted savings accounts, that would bring projected state savings up to 15 percent of annual expenditures by the end of fiscal ’21 — still about $114 million short of the 18 percent minimum that’s recommended to prepare for a recession.
Wayne Hammon, chief executive of the associated contractors, noted that transportation funding is typically one of the last issues taken up during a legislative session. He complimented Palmer on addressing the issue early on.
In an opinion piece sent to Idaho media outlets Wednesday, Hammon also said the contractors association “looks forward to working with Gov. Little, members of the Legislature and stakeholders large and small to review options for a long-term strategy on this important subject.”
William L. Spence may be contacted at email@example.com or (208) 791-9168.