Idaho opens surplus piggy bank

Idaho's surplus fund piggy bank is being cracked open to pay for a number of outstanding debts, repairs and new capital projects across the state.

Gov. Brad Little commented on his signature this week on legislation that pays off state building debt, starts clearing out the list of needed repairs in state buildings and other infrastructure and pays cash for new projects. The proposals were part of Little’s Leading Idaho plan.

“In Idaho, we run state government like a responsible family runs its household budget. In the good years, you plan for the bad years. You live within your means, save for a rainy day and pay down any debt as quickly as you can," Gov. Brad Little said in a Friday news release.

"That’s exactly what we are doing in Idaho," he said. "The steps we’re taking today to use our record budget surplus to pay off state building debt, start clearing out needed repairs in our infrastructure and paying cash for big projects means we’ll save Idaho taxpayers tens of millions of dollars down the road."

At Little's recommendations, the Idaho Legislature appropriated:

• $175.8 million in the Department of Administration’s bond payment program, averting $63 million in interest payments while lowering base budget costs at key agencies.

• $18.5 million to pay off portions of GARVEE (Grant Anticipation Revenue Vehicles) transportation bonds, averting interest of $3.5 million and freeing up additional ongoing transportation funding.

• $244 million as the first installment on a 10-year plan to clear out the state building deferred maintenance backlog (Little had recommended $250 million). A recent study revealed the state had a deferred maintenance backlog in excess of $900 million.

• $368.5 million for major capital projects (Little recommended $372.5 million) that include: $112.4 million for an 848-bed female prison; $37.6 million for medical annex complex improvements at the Department of Correction; $37 million for Chinden Campus improvements; and $29 million for a combined lab at the Idaho State Police. Paying cash for these projects avoids debt service and will save taxpayer dollars.

In and out of session, Rep. Jim Addis, R-Coeur d'Alene, shared a comment via email.

"I think that paying off debt is sound policy and an excellent use of excess funds," he said. "This debt reduction will save us and our children millions of dollars in future interest payments."

Kootenai County treasurer Steve Matheson also weighed in.

"In a rising interest rate environment, I question the wisdom of using the state’s cash position to pay down long-term, fixed rate debt," he said. "The 10-year U.S. Treasury yield hit a fresh two-year high (Friday) as investors anticipate a more aggressive Fed. Strictly from a finance perspective, this decision is interesting."

Idaho Division of Financial Management administrator Alex Adams said this is "similar to what a family does."

"If they acquire extra cash, what they do is pay off debt, credit cards," he said. "State finance isn't too different."

At the start of the legislative session, Idaho boasted a surplus of $1.9 billion.

By paying off debts, catching up on deferred maintenance and paying cash for projects, taxpayers will save money, Adams said.

Paying down $3.5 million in GARVEE bond interest will open up funding for road maintenance and repair.

Chipping at deferred maintenance will save money in the future. Portions of that funding will make long-awaited repairs at North Idaho College, Lewis-Clark State College and the University of Idaho.

"We're taking a big bite out of that backlog and putting the state on the path to pay off the currently known deferred maintenance in the next 10 years," Adams said.

New capital projects include $3.325 million for an aviation apprenticeship lab and diesel bay remodel at NIC and $5 million for a facility upgrade for the Department of Lands in St. Maries, Adams said. Rooms in a veterans home in Lewiston will be converted from double occupancy to single occupancy.

"It gives our veterans, our heroes, better quality of life," Adams said.

One of the largest projects has a price tag of $112 million: A new prison south of Boise.

"Idaho ships prisoners out of state because of the limited capacity," Adams said. "This is projected to keep inmates in state through 2030."

He said these are "good government things that states in our position should be doing."

"They might not grab the headlines, but these are the good government financially conservative things Gov. Little has been known for," Adams said.

He said Idaho has upgraded to AAA credit rating under Gov. Little’s leadership.

"Very few states achieve that level," he said. "It's seen as the gold standard for financial management."