House Bill 362 — Transportation funding

House Bill 362 — Transportation funding

by
Parrish Miller
April 7, 2021
Parrish Miller
April 7, 2021

Bill Description: House Bill 362 would increase transportation funding from the state general fund to state and to local governments.

Rating: 0

Analyst Note: House Bill 362 is similar to House Bill 342. Compared to its predecessor, House Bill 362 increases the amount of money that is shifted from sales tax revenue to transportation and specifically calls for bonding in its Statement of Purpose (SOP).

Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

House Bill 342 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 362 increases this to 4.5% of sales tax revenue but not less than $80 million. 

House Bill 342 further amends Section 63-3638, Idaho Code, to add a new subsection requiring that any portion of the 4.5% referenced above that exceeds $80 million be continuously appropriated to "local units of government for local highway projects in the same percentages provided for in section 40-709(1) through (3), Idaho Code."

The referenced section of code sets the distribution formula, with 30% going to cities based on population and the remaining 70% going to counties and highway districts based on a complex formula.

As written, House Bill 362 is not a spending increase but a spending shift, with at least $65 million shifted from the general fund to transportation. This shift can be viewed positively for two reasons. The first is that transportation is no less important than education, health and welfare, or other traditional priorities paid for out of the general fund. 

The second is that relying on dedicated funding from gas taxes, registration fees, and so forth needs regular increases to these taxes and fees to fund ever more expensive and complex transportation needs. By shifting some transportation funding from the general fund — which has grown considerably in recent years — the state could increase funding for transportation without increasing taxes and fees. 

While this claim is speculative, it is possible that the funding shift in House Bill 362 could indirectly prevent or forestall tax and fee increases that would otherwise be implemented. 

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

House Bill 362 is not without a downside, unfortunately. Instead of using the $80 million in spending authority to fund transportation projects directly, sections 40-720 and 40-721, Idaho Code, allow these funds to be used for long-term bonding. The SOP for House Bill 362 suggests that this $80 million in annual funding could be leveraged to allow for $1.6 billion in bonding — twenty times the amount appropriated annually. 

Spending the money 20 years before it is collected — taking on massive debt — negates the power of this shift to reduce future tax and fee increases. (In fact, such increases are already being proposed in House Bills 360 and 361.)

Moreover, by financing today's transportation projects through debt, tomorrow's appropriations are already spent, thereby guaranteeing that increases in taxes and fees will be required to fund tomorrow's transportation projects, which will inevitably be required.

Government debt is fiscally irresponsible in all cases and places a non-consensual and undeserved burden on future generations to fund the reckless profligacy of the current generation. 

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