Committee deadlocks on bill to require legislative appropriation for new federal grants to Idaho Housing and Finance Association

Representative Cornel Rasor introduced House Bill 325, which would require that federal grants made directly to the Idaho Housing and Finance Association be subject to JFAC appropriation and oversight beginning with new grants after the next fiscal year.

"This bill purports to bring under the control and oversight of JFAC . . . federal grants that are given to the Idaho Housing and Finance Association," Representative Rasor said, describing the proposal as bringing those federal funds into the same oversight that other federal funds received by the state have had.

Brady Ellis, executive vice president of the Idaho Housing and Finance Association, testified in opposition. Ellis said IHFA is a statutorily defined independent public body created in 1972 that issues long-term bond indebtedness and that federal grants are awarded directly to IHFA by federal agencies. Ellis said IHFA annually applies for and receives federal grants "as low as $13,000,000 per year" and that IHFA "strongly opposes and has some concerns about this bill." He said making IHFA's federal grants subject to the state's budgeting and appropriation process would "blur IHFA's independent structure," could adversely affect its bonding activities and might affect state credit ratings.

John McDevitt, general counsel for Idaho Housing, elaborated on legal and credit concerns. McDevitt said treating IHFA's grant receipts as state appropriations could cause rating agencies to view IHFA as a component of the state, raising questions under Article 8 of the Idaho Constitution about indebtedness and potentially affecting the state's or IHFA's credit rating.

Committee members debated the effect on bonding, credit rating, and administrative oversight. Representative Tanner and others argued the measure increases transparency and oversight of public funds and would not prevent IHFA from applying for grants; Representative Petzke, Representative Furness and Representative Handy said they were concerned the bill would set a precedent of appropriating funds that do not flow through the state treasury and that existing federal and independent-auditing requirements reduce the need for this change.

Representative Petzke moved to hold the bill in committee; the motion failed on a 5-5 tie. Representative Tanner then moved to send the bill to the floor with a due-pass recommendation; the motion failed on a roll-call 4-6 and the chair announced the bill will be retained in committee. Committee discussion and public testimony focused on the legal status of IHFA, potential impacts on bonding and credit ratings, whether the bill would only apply to new grants (sponsors confirmed it applies only to new federal grants after the specified effective date), and whether existing audits provide sufficient oversight.

IHFA witnesses and legal counsel described existing federal auditing and oversight practices, including independent financial audits and federal grant-specific audits; IHFA said funds are usually awarded directly by federal agencies and do not flow through the state treasury except in limited cases, such as a prior ARPA pass-through to the treasurer's workforce housing fund where funds were disbursed from custodial accounts. IHFA said it has not received recurring state appropriations and that many of its federal grants are granted competitively to eligible entities.

After the committee votes, the chair announced the motion to send the bill to the floor failed and the bill will be retained in committee for further consideration.