House Bill 314 — Transportation funding, sales tax

House Bill 314 — Transportation funding, sales tax

by
Parrish Miller
March 10, 2021
Parrish Miller
March 10, 2021

Bill Description: House Bill 314 would increase transportation funding from the general fund and allow local governments to put Idahoans in debt by financing transportation projects through bonding. 

Rating: -4

Analyst Note: Using the state general fund to finance transportation spending, rather than relying exclusively on dedicated funding, may allow for a more equitable distribution of funding. Transportation should not be viewed as less important than education, health and welfare, or other traditional priorities paid for out of the general fund.

Does it increase government spending (for objectionable purposes) or debt? Conversely, does it decrease government spending or debt?

House Bill 314 amends Section 63-3638, Idaho Code, to increase the percentage of the funds collected through the state sales tax that is continuously appropriated to the "transportation expansion and congestion mitigation fund." Under current law, this amount is 1% of sales tax revenue but not less than $15 million. House Bill 314 increases this significantly, to 4.5% of sales tax revenue but not less than $67 million. 

House Bill 314 also amends Section 40-720, Idaho Code, to expand the role of the "transportation expansion and congestion mitigation fund" to include projects undertaken by local governments. These funds can be spent on a wide variety of transportation projects, "including but not limited to: mitigating traffic times, maintaining and improving highways and streets, improving traffic flow, constructing new highways and bridges necessary to expand the local system, mitigating traffic congestion, or maintaining, improving, repairing, or replacing bridges and other such infrastructure."

Considering that progressive politicians now claim every bike path and trolley serves to reduce the use of motor vehicles and thereby improve traffic flow (evidence to the contrary notwithstanding), it should not be assumed that the use of these funds will be limited to traditional transportation projects. 

(-1)

Section 40-720, Idaho Code, allows the state to issue bonds to finance state transportation projects. House Bill 314 expands this bonding process to require that 30% of the net proceeds "of all bonds issued pursuant to this section" "be made available to local units of government based on allocation percentages described in section 40-709, Idaho Code." This section includes a formula to fund every city, county, and highway district in the state. 

This change is problematic in two distinct ways. The first problem is simply that it expands the use of debt-based financing in the form of bonds. Increases in government debt are harmful to both current and future Idaho taxpayers.

(-1)

The second problem is that the funding for local governments is set based on percentages rather than according to need. This bill requires that 30% of the net proceeds of all these issued bonds be made available to local governments, and it uses a convoluted distribution formula, found in section 40-709, Idaho Code. These changes will encourage local governments to spend debt-financed transportation dollars even when doing so is not urgent or even necessary. 

(-1)

Does it in any way restrict public access to information related to government activity or otherwise compromise government transparency or accountability? Conversely, does it increase public access to information related to government activity or increase government transparency or accountability?

Typically, when a local government wishes to use bonds to finance a project, a vote of the people is required. This process is important to maintain accountability, especially since it is the people in that local community who will be required to pay back the debt. 

Under the proposal found in House Bill 314, local governments will receive debt-financed money for all manner of transportation projects with no vote of the people and no anticipation that the local community will be solely responsible for paying back the debt. Instead, the debt is taken on without the public's input and money is distributed to hundreds of local governments across the state with minimal oversight and virtually no accountability.

(-1)

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