BOISE • Gov. Butch Otter’s failure to raise $174 million annually for roads and bridges in 2009 remains the biggest defeat of his seven years in office.
As Otter seeks a third term next year with likely primary opposition from his Republican Party’s right wing, a new coalition — from farmers to chambers of commerce — is working independently to convince lawmakers to boost revenue.
“One of the failures of 2009 was it was driven from the top down,” said Otter’s former budget chief, Wayne Hammon, now executive director of the Idaho Associated General Contractors. “It didn’t involve the local highway districts. And (the Idaho Transportation Department) wasn’t even prepared to spend the money. We’re setting out to correct those things.”
Otter’s early draft bills in 2009 earmarked additional revenue for the state, leaving out the locals.
Revisions to those bills added funds for the 64 districts, but they never were fully on board.
This summer, Hammon and Stuart Davis, executive director of the Idaho Association of Highway Districts, became partners. They dusted off the Idaho Transportation Coalition, an AGC political action committee that spent $27,500 on broadcast ads and polling in 2009, and convened a meeting of stakeholders at AGC’s Boise office in June.
More than 50 people showed up, representing AAA Idaho and truckers, auto dealers and convenience stores, cities and counties, police and sheriffs, legislators and ITD and the usual collection of cheerleaders among engineering and construction firms.
Hammon said the aim is to raise something close to the $262 million in new revenue to cover unmet annual maintenance needs identified in 2010 by a task force appointed by Otter. ITD’s annual highway budget is $443 million for about 5,000 miles of state and federal highways. Cities, counties and highway districts spend about $405 million on about 28,000 miles of roads.
Knowing that conservatives averse to tax increases of any sort have the balance of power in Idaho, the coalition is appealing to the notion of stewardship.
“We have some work to do convincing some of the more conservative members of the Legislature that now is the time,” Hammon said. “But there is a sense of urgency because it’s cheaper to do it today than it is tomorrow.”
Will It Take a Flood?
Conventional wisdom holds that convincing lawmakers to vote for a tax increase in an election year — particularly with the rise of tea party candidates in the GOP — is folly.
“I think it’s almost over-the-top ambitious,” said Gilbert Hofmeister, Davis’ boss as president of the Association of Highway Districts and chairman of the board of the Power County Highway District. “But Stuart has been working his tail off all summer and I think we’ve finally got some people listening. I think they’re starting to realize our infrastructure is falling apart.”
Ray Burzota, general manager of Central Produce Distribution in Payette, said weight limits on the Idaho 52 bridge across the Snake River to Oregon hurt his business. During about six weeks of the eight-week onion harvest, about 60 trucks a day detoured through the congestion of Ontario, Ore., to get to his warehouse.
Loaded trucks, at about 13 tons, were barred from the bridge pending a load test. That meant as much as 10 to 12 miles of travel.
Burzota said he supports higher taxes and fees to fund maintenance. “It’s an inconvenience and it’s costly, too,” he said.
An influential veteran of 2009 who is part of the new coalition doesn’t need persuading about the need. But Alex LaBeau rules out any prospect of success next year.
“People need to come to grips with how we fund our transportation system,” said LaBeau, president of the Idaho Association of Commerce and Industry. “But do I sense that under any circumstances the Legislature will increase fees or taxes for transportation in 2014? Absolutely not.”
Davis counters that two of the last three increases in fuel taxes came in election years, 1988 and 1996. The other was 1991.
“There’s no good time to raise a fee like this, but our backs are against the wall,” Davis said. “I’ve got districts grinding up pavement and going back to gravel.”
Davis and Hammon said no decisions have been made on what elements they’ll put in the bill, but Davis likes the idea of extending the 6 percent sales tax to fuel, a provision used in many states. “It’s not a new fee, it’s actually removing an exemption,” he says.
That would raise $175 million annually, costing the average motorist $155 per year, Davis said. That assumes gas at $3.90 a gallon and 12,000 miles driven in a Toyota Camry. Increasing Idaho’s relatively low registration fees by 50 percent would bring another $50 million. Registration fees vary depending on the age of the vehicle.
But Lt. Gov. Brad Little, who chaired Otter’s Task Force on Modernizing Transportation Funding that met for 15 months in 2009 and 2010, said Davis’ citation of 1996 may not be a relevant precedent.
GOP Gov. Phil Batt, a former member of the ITD board, championed the 1996 fuel tax boost. The economy was robust, Batt had decided against seeking a second term and many highways and bridges were damaged by vicious winter storms.
“First, Gov. Batt wasn’t on the ballot, and second, there was a flood,” said Little. “It’s going to be difficult and it should be difficult to raise taxes.”
One Flight Up
In the waning days of the 2013 session, five bills were introduced to kickstart the funding conversation.
The first, House Bill 337, came from Rep. Clark Kauffman, R-Filer, a highway district commissioner himself. It would raise $162 million a year by increasing the sales tax from 6 percent to 7 percent. The bill would sunset after five years.
The others came from Senate Transportation Committee Chairman Bert Brackett, R-Rogerson. The granddaddy of Brackett’s bills was HB 338. It would have raised $237 million with increased fuel taxes; higher fees on registration, fuel transfer and overweight and oversized loads; a new charge on electric and hybrid vehicles; directing sales tax from tires and other vehicle equipment to roads; imposing a new sales tax on short-term vehicle rentals; and increased enforcement of the “dyed fuel” program for vehicles not permitted on public roads.
Brackett’s HB 339, 340 and 341 mixed and matched the provisions in 338, raising smaller amounts. No hearings were held on any of the measures. But House Transportation Committee Chairman Joe Palmer, R-Meridian, spearheaded a discussion in a closed-door GOP caucus.
Palmer said breaching the taboo of using general sales tax revenues for transportation may help convince conservatives to boost funding. Kauffman’s sales tax bill would do that, as would some features from Brackett.
“If we could start down that road a little bit I think the more conservative group of people would agree that we could increase somewhere else,” Palmer said, adding that he prefers raising registration fees rather than fuel taxes. “There’s so many people that barely get by and they gotta buy gas to get to work.”
ITD relies entirely on “user fees” — principally a 25-cents per gallon state tax on fuel, state vehicle registration fees and its share of the fuel-tax-funded federal Highway Trust Fund. Local highway districts, however, use property taxes, which account for about half their budgets. In Ada County, voters have twice approved an extra $20 annual registration fee that goes to roads.
Whatever the mix, Hammon said, getting ideas to bubble up from the Legislature — which meets on the Capitol’s third floor, one flight above Otter’s office — is critical. “It needs to come from the third floor,” he said. “If you’re going to ask legislators to make a tough vote on something like this, they ought to develop the bills.”
In 2009, the country was in a deep recession. That, said Little, is often overlooked when Otter is blamed for failing to sell his plan. “It was the worst possible year, but it was a failure of timing.”
ITD’s reputation also was suffering, with a critical performance audit and widespread belief the department was top heavy.
Since then, Director Brian Ness has cut supervisory positions and found savings to pay for another $100 million for projects over five years. This year, ITD won four awards from the American Association of State Highway and Transportation Officials for administration, innovation, environment and its aviation division — the most of any state.
Chairman Palmer says the estimate of a $262 million maintenance shortfall may be “rounded up a little bit,” but added, “I think they’re pretty accurate. I have a lot of faith in our guys, both at the highway districts and the state.”
Little said the Idaho economy requires two things: a better-educated workforce and better transportation.
Idaho’s road maintenance needs have been obscured by almost $900 million in “GARVEE” debt-funded construction and reliance on the Highway Trust Fund that provided $1.70 to Idaho for every $1 paid in fuel tax from 2005 to 2009, according to the U.S. Government Accountability Office. That subsidy — common for small-population states maintaining a relatively large highway network — are threatened by the U.S. debt crisis, Little said.
“We put a big Band-Aid on it, and those are gone,” Little said. “Now, we gotta reveal the wound.”
Hammon and Davis have been meeting with chambers of commerce, trade associations and service clubs to make their case.
Earlier this month, Hammon spoke to the Boise Sunrise Rotary Club, sipping on a diet Coke at 7 a.m. He urged them to think of roads and bridges as a utility, like water or electricity.
“The window for us to do something about this is closing and the longer we wait the more urgent this maintenance problem will be,” he said.
Hammon is mindful that the softer sell may take more time than the less-patient Davis envisions. He told the Rotarians, “The next time you see those orange barrels, I want you to think, ‘Is this a construction project or maintenance? How are they paying for this?’”
He also asked that they talk up maintenance with friends, colleagues and family.
“So when the Legislature does tackle this — whether that’s this year, or next year, or the year after that, or the year after that — you’re going to know what they’re talking about.”
Dan Popkey: 377-6438,
Idaho transportation politics: A short history
The recent history of Idaho transportation funding begins in 1996, the last time Idaho raised revenues through conventional means.
After winter floods bad enough to draw President Clinton to survey the damage, Gov. Phil Batt convinced lawmakers to raise $34 million annually with a $6-per-vehicle registration fee increase and a 4-cent boost in fuel taxes, to 25 cents a gallon. Even with a robust economy and the flood damage, Batt’s bill passed the Senate by a single vote.
In 2005, with tax increases considered unpassable in the Legislature, Batt’s successor, Gov. Dirk Kempthorne, tried another route: debt.
It took Kempthorne angrily vetoing eight bills, coloring every page red, to convince reluctant lawmakers he was serious. They finally authorized $1.6 billion in borrowing backed by future payments from the federal Highway Trust Fund. But Kempthorne had to agree to line-item approval of projects by the budget committee and lawmakers ultimately scaled back the authority to a maximum $998 million.
GARVEE’s total bonds are now planned to reach $857 million, with the final $82 million scheduled for sale in January. Coupled with federal money, $898 million has been spent on projects in six corridors; of that, $613 million has been spent in the Treasure Valley on I-84 and a connection from I-84 to Idaho 16 and Emmett.
In April 2007, three months after taking office, Gov. Butch Otter began a campaign to raise $200 million. But the 2008 Legislature would agree only to $68.5 million, which Otter rejected, telling lawmakers, “You might as well get out of town.” That summer, Otter held six regional meetings to make his case.
By 2009, Otter had compromised his target to $178 million. But the House voted six times against gas tax increases, ranging from 2 cents to 10 cents a gallon. Otter tried Kempthorne’s tactic, vetoing 33 appropriations bills and urging citizens to press their legislators to support him. Instead, the nascent tea party movement dominated the public response, opposing any increases.
Finally, after 117 days, one day short of a record-long session, Otter settled for $33 million in new money.
In August 2008, Otter appointed the Task Force on Modernizing Transportation Funding. In November 2010 — after Otter was re-elected — the panel issued its findings.
State and local highway funding is $262 million short of meeting annual operation, preservation and restoration needs, the task force said, while annual capacity and safety enhancement needs are $281 million.
Despite the urging of Lt. Gov. Brad Little, the task force chairman, the group could not agree on a course of action to raise any money, leaving that to the Legislature.
Otter remains mum about any plans to make a pitch to the 2014 Legislature. Otter spokesman Jon Hanian said the governor would “not get into budget priorities” until he gives his State of the State and Budget Address in January.