Five states look to tap $7 billion in bonds for road needs

By Keith Goble, Land Line state legislative editor | Wednesday, April 12, 2017

State lawmakers across the country are devoting much of their time this year to coming up with solutions to address transportation funding needs. As an alternative to increasing taxes and fees under consideration in nearly half of all states, multiple statehouses are opting to look at borrowing needed money.

A new law in Idaho provides $320 million for transportation work via bonds.

Gov. Butch Otter had until Monday, April 10, to decide whether to sign the bill, veto it, or allow it to become law without his signature. The governor chose to allow the bill to become law without taking action.

Previously S1206, the new law authorizes the state to issue $300 million in bonds to be repaid using federal transportation funding. The grant anticipation revenue vehicle bonds, or GARVEE bonds, allow states to borrow against their future federal highway allocations. This allows the state to get money needed up front.

The Idaho Transportation Board will decide which projects are selected and allocate the bond proceeds.

Most of the state’s cut is expected to be used for reconstructing Interstate 84 in Canyon County. Work to improve and widen state Highway 75 from Timmerman Hill to Ketchum is also among eligible projects the bonds could fund.

Also included in the law is authorization to shift 1 percent of the state’s sales tax revenue to a new program intended to expand state highways. The sales tax revenue stems from the state’s cigarette tax.

In addition, for the next two years a portion of general fund surplus will continue to be devoted to transportation work. The allotment was set to sunset later this year.

The state will receive 60 percent of the proceeds via surplus funds, and local governments will get 40 percent.

Across the state line in Utah, a new law taps general obligation bonds to pay for work to reduce congestion along the state’s major highways.

SB277 permits the state to issue up to $1 billion in bonds over four years. A 15-year payback period is included.

The Utah Transportation Commission will choose projects to prioritize from a list of approved work.

West Virginia Gov. Jim Justice signed a bill into law on Monday that raises the limit on GARVEE bonds to cover highway work.

HB2878 increases from $200 million to $500 million the amount the Division of Highways is permitted to use to apply for bonds.

The new law stipulates funds can be used to complete interstate or other highway facilities designated as part of the federal-aid highway system or for toll bridges.

The bonds will be repaid within six to 12 years.

A conference committee made up of select members from both chambers at the Minnesota Legislature is charged with working out differences on a transportation funding plan to spend up to $6 billion in the next decade.

The Republican-led House version would borrow $2.2 billion over two years. Republicans controlling the Senate instead want to borrow $1.3 billion over two years and divert sales tax on transportation-related purchases to roads and bridges.

Democratic Gov. Mark Dayton and his party leaders at the statehouse want to include fuel tax rate increases. We’ll be watching HF861/SF1060 as it moves through conference committee.

In Colorado, a funding plan relies on sales and use taxes and borrowing to get transportation work underway.

The Senate Transportation Committee voted on Tuesday to advance a Republican-amended bill that would give voters the final say on the funding plan.

The Senate version would raise state’s sales tax by one-half percent – down from 0.62 percent approved by the Democrat-led House. The increase would be offset with $100 million annually from the existing state budget.

The Colorado Department of Transportation would receive 53 percent of the sales tax amount each year in the Senate plan. House lawmakers approved $3.5 billion to repay the loan.

HB1242 awaits further consideration in the Senate Finance Committee. If approved there, it would head to the chamber floor.

Before the funding measure could advance to Democratic Gov. John Hickenlooper’s desk House lawmakers would need to sign off on changes or send the bill to a conference committee.

Senate Transportation Committee Chairman Randy Baumgardner, R-Hot Sulphur Springs, acknowledged Tuesday that HB1242 “is not a perfect bill.”

“It’s an evolving piece of legislation.”

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