The Senate Leadership Committee recently was given a presentation by the Idaho Transportation Department on the GARVEE (Grant Anticipation Revenue Vehicle) bonds proposed to fund Gov. Kempthorne's "Connecting Idaho" initiative.
GARVEE bonds are a federal program in which the State of Idaho is given the authority to issue bonds for highway projects and pay them back with future federal highway dollars. The bonds would not increase taxes or take from the general fund in any way.
According to reports from the U.S. Census Bureau, Idaho is the sixth fastest-growing state in the United States. It is estimated that Idaho is already home to 133,000 new residents since 2000, and will be home to 210,000 more in five years. By the year 2025, our state population will nearly double.
The growth of Idaho's population is inevitable, and we will have to build and expand our highways sooner or later. I support doing this sooner, because it builds tomorrow's roads at today's price. For example in 10 years, if we were to build as we traditionally do, a $100 million project with the price of inflation would cost $237.2 million. With the GARVEE bonds, the project would cost $177.9 million; we would reduce payouts by $59.3 million, plus we would get those roads today.
The governor's plan would build 258 miles of new or improved roadways and bridges all over state, including expanding state Highway 75 through Timmerman to Ketchum. As Sun Valley's and Ketchum's cost of living increases, many of the valley's workforce are deciding to live elsewhere. As a result, many commuters and residents have found themselves spending hours sitting in their cars on this stretch of highway.
This is a similar case for many Idaho residents as they venture onto the roadways across the state including residents from Caldwell commuting to work into Boise on Interstate 84, or residents throughout Gem County commuting on State Highway 16. With the GARVEE program, the state will complete 30 years of needed road work in 10 years, and we can begin to breathe a little easier during our commutes to work.
Idaho will also reap the benefits of this plan economically. Idaho can anticipate 75,000 new jobs in the construction and services sector. We can also look forward to an estimated $2.9 billion boost in sales throughout the state as the transportation of goods, services and people becomes more efficient and safe.
Critics of this plan say that using the GARVEE bonds to pay for roads still puts Idaho into debt. They believe it is debt that the state does not need to accrue at this time, and that we should only use the bonds for highways or roadways that are absolutely necessary right now. They also argue that to pay this debt back can seize up to nearly 42 percent of incoming federal highway funds in upcoming years, or higher if the federal highway dollars do not increase as anticipated. This would leave the transportation department with fewer dollars in the future for other projects not listed on the "Connecting Idaho" plan.
I appreciate the caution of the critics. Yet, federal funds have averaged a 6.1 percent annual increase since 1986. Even if the federal highway dollars do not increase, it is very unlikely that federal dollars will decrease. With that formula, the maximum amount of federal dollars that will go to pay debt service on the proposed bonding program will be 42 percent, which is approximately 30 percent of the Transportation Department's total budget. Even with this conservative scenario, I still think that this is very feasible. It still leaves the department flexibility to meet the needs of other current or future projects.
The projects proposed by Gov. Kempthorne's plan are necessary and will need to be built whether it is today or in 30 years. One way or the other, we will have to finance these projects. Inflation, the cost of easement acquisition and the cost of construction will not decrease. We should not wait until the congestion and danger on our highways is so demanding that we are forced to build. True it is expensive, but the demand and the cost to build these highways will only increase with time.