Wrong turns leave Idaho without a highway map As Idaho struggles to pay to upgrade its aging road system, one former governor says he can't remember a time when ITD's standing was so low Idaho Statesman, August 9, 2009 BY: DAN POPKEY Paying for new and better roads has bedeviled Idaho governors for a century. In 1911, Gov. James Hawley called Idaho roads “a disgrace to the State” and urged the Legislature to “devise a proper system that will cure this evil and put us in line with the other advanced States of the Union.” Only after he left office did legislators create the first highway commission. In 2009, Gov. Butch Otter pleaded for legislators to raise road taxes to keep Idaho travelers safe. “Would any of us truly be unwilling to pay a few extra dollars for that peace of mind, even in the toughest of times?” he asked. “Aren’t our loved ones worth it?” Otter has devoted his governorship to trying to win over lawmakers. His latest gambit is a task force — which won’t even report back until after the 2010 election. The governor and his task force face a daunting challenge: A recession, broken promises and leadership problems have led to a breakdown at the transportation department and a loss of confidence in the state’s road- builders By Dan Popkey [email protected] It ought to be simple. Legislators of all stripes, business Joe Jaszewski / Idaho Statesman leaders and mayors, the AAA and the AARP, want safe, From left, Boise mayor Dave Bieter, Idaho Lt. reliable roads. Gov. Brad Little, Gov. Butch Otter and state Sen. John McGee at the Vista Ave. interchange But rather than generate consensus, the goal of groundbreaking ceremony on Wednesday repairing and rebuilding Idaho's aging, crowded highway morning. The $17.8M Interchange system has split lawmakers along rural and urban lines, reconstruction at I-84 is part of the I-84 cost the transportation director her job and pitted bitter GARVEE corridor. legislators against the very agency in charge. Of the promises made by the Idaho Transportation Department, the House Transportation Committee chairwoman said: "We were lied to." It wasn't always so. Until 2002, ITD's director was a popular, long-term officeholder who had governors' ears and legislators' respect - and money. Idaho financed a workable highway system with state fuel-tax revenues and ample federal highway money. Lawmakers raised Idaho's pennies-on-a-gallon fuel tax in 1971, 1976, 1981, 1982, 1983, 1988, 1991 and 1996 to keep pace with inflation. BORROWING INSTEAD OF PAY-AS-YOU-GO But Gov. Dirk Kempthorne didn't try to raise taxes during his tenure, 1999-2007. Instead, he championed creative financing to accelerate a handful of highway projects today and pay for them later with future federal road taxes. The borrowing plan allowed swift construction on I-84, U.S. 30 and U.S. 95 but created cracks that the sagging economy, and ITD's political bumbling, split wide open. Today, ITD is left with expensive payments for Kempthorne's road-building plan - known as GARVEE, an acronym for Grant Anticipation Revenue Vehicle bonds - and without the broad statewide funding and goodwill needed to rebuild the roads Otter says Idaho needs to grow and prosper. "GARVEE was the beginning," said Sen. Shawn Keough, R-Sandpoint, the senior member of the Senate Transportation Committee and vice chairwoman of the Legislature's joint budget committee. "The mistake that was made was the sales pitch, 'Bonding is the answer, and all our transportation needs will be solved.'" Kempthorne called for spending $1.6 billion on 13 projects across the state. Lawmakers, worried about taking on too much debt, trimmed the proposal to $998 million and six projects, half of them in the Treasure Valley. POLITICS INVADE PROJECT SELECTION Keough said GARVEE broke the tradition of insulating construction decisions from regional legislative politics and created "a list of haves and have-nots." "Underneath the vision was the reality that some pieces of the state would benefit greatly and that part of that would come at a cost to those who didn't get a project," said Keough, whose district got GARVEE money to widen U.S. 95, though part of the project has been delayed. "That politicized ITD more than it had ever been." On top of all that, Lt. Gov. Brad Little, whom Gov. Otter has asked to run a task force to find a solution to chronic funding shortfalls, says resistance to tax increases and a tough economy have turned ordinary political give-and-take into a crisis. "The accusation that ITD is tone deaf wouldn't be a problem if we weren't talking about raising taxes," Little said. "Otherwise, I think there'd be the same background noise that exists most of the time." REGULAR BUILDING PLAN SUFFERS Dwight Bower was the last ITD director popular among legislators. He served a decade before retiring in 2002. GARVEE was a "good concept" but "over-promised in quantity of product and dollars available," Bower told the Statesman. GARVEE will consume $43 million in debt service this year. When fully funded - $666 million has been authorized - interest is projected to rise to $77 million a year through 2029. That's about one-sixth of the pay-as-you-go ITD budget. The debt angers lawmakers, because it prompted cuts or delays in regular projects - something the Kempthorne administration insisted wouldn't happen. "The GARVEE debt sucked everything else off the table," Keough said. "Every other project of major consequence was gone." House Transportation Committee Chairwoman JoAn Wood, R-Rigby, was among the most formidable foes of Otter's push to raise taxes in 2008 and 2009. Her famous 2007 statement that ITD "lied" came after lawmakers learned projects on the traditional State Transportation Improvement Plan weren't kept whole after all. Wood cites three delayed overpass projects on U.S. 20 in her area - at Rigby, Lorenzo Bridge and Thornton. "That really shook our confidence, and we've had a hard time getting it back," Wood said. TAKING RISKS AND FAILED STRATEGY Former Gov. Phil Batt, the last governor to secure a fuel-tax increase, said he can't remember a time when ITD's standing was so low. "It's been a gradual deterioration that has accelerated as anti-tax people dominate the Legislature." Batt, who served on ITD's board before being elected governor in 1994, opposed GARVEE "because it's only putting off the day of reckoning. We should have faced the ongoing funding need any time along the way, including that time." Batt credits Otter for guts. "You have to realize that's not a political plus for him. You take a risk any time you want to raise taxes." But Otter is faulted by legislators, lobbyists and academics for misjudgments that compromised his chances of success in 2009. They cite a failure to heed warnings from House leaders who predicted losing floor votes; being too late to engage Democrats; appearing petty by vetoing 33 bills as a signal of his resolve; and losing a key bargaining chip by signing a bill for $82 million in new GARVEE debt before securing new ongoing revenue. Perhaps most significantly, Otter misread the public when he asked people to contact legislators to urge a tax increase. Most of those who spoke up opposed him. The 2009 session mirrored 2008, when Otter also quit the field and agreed to lawmakers' demand for an audit of ITD. In January, the auditors reported that Otter's quest for a $240 million boost in annual revenues was likely too modest. They also suggested reforms to track maintenance of roads and bridges, a plan for capital improvements and operations, and accountability measures. RECESSION STIFFENS OPPOSITION TO TAXES Otter figured he was set. The independent assessment lawmakers sought bore out his case for the need to raise money. Instead, a cratering economy, resistance to raising taxes in hard times, and ITD's credibility woes dashed his hopes again. Little agrees that loss of confidence in ITD is rooted in GARVEE's failure to meet expectations. He was an early skeptic and helped limit GARVEE debt service to 20 percent of the state's share of federal highway taxes. "My point was: If we've got a fundamental need for more money, why don't we pay for it with cash going forward instead of borrowing?" Construction inflation and falling state fuel-tax revenues contributed to the program's shortcomings, Little said. "It was always a bit of a crap shoot, but that combination of things put us in the wreck we're in today." HIGH HOPES IN NEW LEADERSHIP The 2009 session was a wreck for former ITD Director Pam Lowe, a civil engineer for 30 years and a 14- year department veteran. Former Director Bower, who returned as acting director for five months in 2006, made Lowe his deputy director. She was promoted to the top job by the board in December 2006. The board's hope was that Lowe would restore credibility that eroded under ITD Director Dave Ekern, who'd pushed GARVEE hard. Ekern resigned in August 2006 after a study by board member Darrell Manning found problems with communication and morale at ITD. "I thought we were in crisis mode with the existing director," said Frank Bruneel, ITD chairman during the seven-month governorship of Jim Risch. Bruneel said Lowe seemed a promising choice. "I had faith and confidence in Pam Lowe," said the former House Republican leader. "You could give her direction and if you asked questions you got straight answers." CAUGHT IN A CROSSFIRE But some legislators complained Lowe didn't communicate well at all.