Five states look to tap billions in borrowing for road needs

By Keith Goble, Land Line state legislative editor

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, which are under consideration in nearly half of all states, multiple statehouses are opting to look at borrowing needed money.

A new law in Utah taps general obligation bonds to pay for work to reduce congestion along the state’s major highways. The bonds will be secured via a pledge to use available resources to repay bond holders.

The state is permitted 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. The commission will work from a list of approved work.

Across the state line in Idaho, a new law provides $320 million for transportation work via bonds.

The state is now authorized 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.

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 expire later this year.

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

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

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

Funds can only 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 has reached agreement on a transportation funding plan that taps bonds.

The Republican-led effort includes borrowing $600 million for road

construction and the state’s Corridors of Commerce program.

It is unclear whether Democratic Gov. Mark Dayton will sign the bill into law.

The Colorado Legislature has also approved financing to help get road work done. Gov. John Hickenlooper is expected to sign into law a bill that uses certificates of participation – described by lawmakers as similar to bonds – to raise $1.8 billion for roads over the next 20 years. LL