A Republican senator has beaten his Democratic counterparts in filing a bill to extend the maturity of highway bonds to 30 years from 20 years.
The idea has, in fact, been labeled a top priority by Gov. Janet Napolitano in her budget proposal released Jan. 12.
The move is expected to generate some $400 million, according to an estimate by the Governor’s Office.
Republican reaction to Napolitano’s budget proposal had ranged from cautiousness to outright dismissal of some items, particularly on borrowing money to finance the construction of highways and schools.
Sen. Robert Blendu, R-12, asked if his bill, S1172, reflected a shift in the majority caucus’ perceived stance on borrowing, said not at all.
“I’m a stock broker, so I believe I totally understand this issue,” he said.
He cited two reasons for proposing the bill.
“The first advantage is when we extend debt for 30 years versus 20 years, government has an advantage because government ends up paying back with lesser dollars 30 years from now through inflation than they do in 20 years,” he said. “So you know those are cheaper dollars that we pay back.”
The second advantage, he said, is that it is cheaper to build roads now, than build them later.
“So what that (measure) lets us do is to build a road now, thereby not only providing that tangible benefit to our citizens, but the cost of materials would be cheaper sooner rather than later, incurring another benefit,” he said.
Blendu said he has not yet discussed his proposal with his colleagues.
Sen. John Huppenthal, R-20, earlier called borrowing money to build more schools a “bad idea.”
Sen. Robert Burns, R-9, had been emphatic in his opposition to borrowing. The chair of the Senate Appropriations Committee has proposed a bill to take $450 million from the rainy day fund to accelerate the construction of highways, suggesting that doing so now is wiser than swelling the state’s debt and paying later.
Blendu said he does not believe extending the maturity of highway bonds is borrowing.
“I don’t think that we’re borrowing money. We’re just extending the maturity of money that we already have borrowed,” he said, adding not having the ability to extend debt, when it is deemed beneficial, is “penny-wise and pound foolish.”
Experience also shows that the Arizona Department of Transportation has been responsible in issuing bonds, he said.
“Unless we have the cash to build the roads right now, we’ve got to talk about alternatives. One is to extend the debt that we have now out an additional 10 years. That’s a reasonable alternative for us not only to discuss but also pursue in those instances where it is beneficial,” he said.