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Beyond the bond: Boise pivots toward long-term funding strategy

There was a sigh of relief at City Hall on Nov. 4, when Boise voters overwhelmingly passed a $17 million bond to fund five projects for the fire department. At long last, the projects atop the city's priority list were paid for.

Relief quickly gave way to urgency. The city's budget experts and department heads got to work on the next page of the project priority list.

A branch library at Bown Crossing? If not the top of the list, it's close.

New and improved parks on the Bench? Absolutely.

The idea all along has been that the bond, if it passed, would free up money for these kinds of projects.

What about renovation — or replacement — of the main library branch? Well, that might have to wait.

It's a matter of scope. A branch library at Bown Crossing might cost in the neighborhood of $5 million. New parks and improvements to existing ones could cost substantially less.

A new or thoroughly renovated main library branch is likely to run in the neighborhood of $35 million to $50 million. Saving that much money could take decades and force the city to shelve other projects on its list.

So what's the answer? Another bond could be in the works, maybe 10 years down the road.

Part of the problem is that Boise's has an underfunded plan for upgrading its buildings and other infrastructure. Why? The answer stems from the (in?)famous Frazier Case.

In 2004, Boise watchdog David Frazier challenged Boise's no-vote bond to pay for a parking garage at the Boise Airport. His case focused on the phrase "ordinary and necessary." Unless they use the money for expenditures that meet that standard, the state constitution prohibits governments from taking on debt without two-thirds approval from voters.

In 2006, the Idaho Supreme Court agreed, concluding that governments could incur no-vote debt only if the expenditure is necessary "on an immediate or urgent basis."

Before the Frazier Case, the Boise Fire Department and other departments in routinely borrowed money to fix buildings and upgrade equipment. No vote was required in those days, because judges usually agreed that the projects met the Idaho Constitution's standard of "ordinary and necessary" expenditures.

After the Frazier Case, though, the city was operating in what Jade Riley, Mayor David Bieter's chief of staff, called a "cash environment." Because it had relied on debt to pay for big projects, Boise didn't have a cash account for them.

Now, Boise plans to divert more of its general fund into what's being called a capital contingency fund — basically, an account for capital projects like the Bown Crossing branch and new parks.

But it won't be enough for the really big items, such as the main library or Southwest Boise's as-yet undeveloped Murgoitio Park, which would be the biggest city park.

Riley said he and Boise's budget types are considering a proposal that would divert part of the budget into what I'll call a "debt-service fund." The idea behind the debt-service fund is that it would repay a future bond for those really big items without having to raise taxes.

It's clear Riley and the rest of Bieter's office believe the "no new taxes" aspect of this year's bond attracted enough "yes" votes to push it over the top in a city where bond elections are rarely successful. They believe they can repeat that message when this year's bond is paid off and win another one.

The beauty of the debt-service fund, Riley said, is that if voters deny the bond, the city can use money it would have spent on bond payments to instead pay for smaller items or let it accumulate.