North Idaho lawmakers tussle over Highway 95

BOISE - A squabble between North Idaho lawmakers nearly killed a highway bonding program Friday, as half of North Idaho’s delegation fought for full funding for a U.S. Highway 95 construction project next year, and the other half fought for an alternative plan aimed at saving the state money on interest costs. In the end - after four votes, two of which were deadlocked - the Joint Finance-Appropriations Committee voted 12-8 in favor of a $12 million bonding program for next year, down from the $26 million Gov. Butch Otter requested. Missing from the plan is $13 million for construction on the Garwood-to-Sagle freeway project on Highway 95 between Coeur d’Alene and Sandpoint, but that project would get anything left over after $11 million is spent for right-of-way acquisition on a southern Idaho construction project on State Highway 16 west of Boise. Rep. Frank Henderson, R-Post Falls, who originally crafted an $11 million proposal, argued that his plan wouldn’t cause any delays in the Garwood-to-Sagle project. He said $24 million in existing authorized bonding remains unspent on the project due to an overdue environmental impact statement that might not be done until July. That money, which is for both right-of-way acquisition and construction, can be spent in the coming year, Henderson said. If Idaho were to issue bonds for the rest of the construction work on the project but not be ready to spend the money, Henderson said, the state could lose hundreds of thousands of dollars through “negative arbitrage” - earning only about 1 percent in short-term interest on money it had borrowed at roughly 4 percent interest. He estimated such interest losses could add up to $200,000 per month. “We’ll be in session next year, and we can provide the additional appropriation needed, and we can avoid the costly issue of negative arbitrage,” Henderson told the joint budget committee. He was backed by Rep. George Eskridge, R-Dover. However, ITD says it doesn’t issue the bonds until it’s ready to go out to bid; it hasn’t yet sold the bonds for the $24 million from the past years’ authorizations. And the agency said the negative arbitrage issue doesn’t affect its debt payments on bonds because it relies on fixed-rate, long-term bonds. Sen. Jim Hammond, R-Post Falls, said he worried about possible delays in the project, and proposed funding to match the governor’s recommendation for highway bonding next year - $26 million, including $11 million for the southern Idaho project and $14 million for Garwood-to-Sagle. Sen. Joyce Broadsword, R-Sagle, backed Hammond’s move, as did former Bonners Ferry Mayor Darrel Kerby, who was substituting Friday for Sen. Shawn Keough, R-Sandpoint. “Construction costs are down, now is the time to do the construction - not wait until costs rise again while everything is getting more expensive,” Broadsword declared. However, committee members uncomfortable about any additional highway bonding opposed the pricier proposal, and neither plan could get a majority, leaving the joint budget committee deadlocked on both. Both Hammond and Henderson then proposed $12 million plans, but Hammond called for directing the money first to construction, and only secondarily to right-of-way purchases. Henderson held out for the Highway 16 right-of-way purchases. Hammond’s second proposal was defeated on an 8-12 vote, and then Hammond, Broadsword and Kerby joined Henderson and Eskridge to pass Henderson’s $12 million plan. “We ended up fine,” Henderson said afterward. He said with the big savings the Idaho Transportation Department is seeing in construction bids due to the economic downturn, the state might even be able to finish the Garwood-to-Sagle project without the additional bonding authority. He said he’s confident that next year’s Legislature will approve the final payment if it’s still needed - though an election lies between now and then, with every seat in both houses up for a vote. “They’ll do it,” Henderson said. For Kerby, the tumultuous budget-setting meeting was his first task as he sits in for the rest of the month for Keough, who’s in North Idaho with her husband, Mike, who’s facing major open-heart surgery on Monday. “I’m kind of drinking out of a fire hose, coming down here in the middle of a session that’s already heated,” he said. Kerby said he was in constant contact with Keough via e-mail during the debate, and voted as she directed. “She was engaged during that,” Kerby said. Kerby said he understood the concerns of both sides in the North Idaho lawmakers’ split. “The need is so great,” he said of the Highway 95 project. “It’s going to get done - it’s just I want it sooner rather than later, and I don’t want any barriers.” North Idaho lawmakers, Kerby said, “still remain friends.”