Utah is one of the best-managed states, and fiscally conservative legislators are trying not to issue general obligation bonds, and thus reduce state debt.
But the old bugaboo of conservatives is revenue bonds – a type of borrowing that usually entails higher interest rates, but which does not directly obligate state government, and thus taxpayers, for repayments.
Wednesday there was a hiccup when the Utah House tried to pass HB9, a bill that would authorize various state agencies/universities to issue $90 million in revenue bond spending on new buildings.
There is no general obligation bond this year, as lawmakers and GOP Gov. Gary Herbert see $550 million in surplus one-time and on-going tax revenues.
In an election year for Herbert, all of the 75-member House and half of the 29-member Senate, it would be politically unwise for fiscally conservative GOP officeholders to borrow more money.
But, in theory, conservatives usually don’t have a problem with revenue bonds, since there is a “revenue stream” generated by the agencies/universities to pay off the bonds – and not direct taxpayer funds.
But several House Republicans asked that HB9 be held Wednesday morning so they could better understand the nearly-$100 million spending package, which includes $50 million to expand the University of Utah’s David S. Eccles Business complex.
There will also be a new state liquor store in Syracuse and a new court building in Provo.
Utah State University will spend $20 million buying a current apartment building for students and $12 million for building a Space Dynamic Lab Phase II.
Rep. Gage Froerer, R-Huntsville, House chair of the Legislature’s building committee, said all of the projects had been vetted, and he could promise that there are sufficient revenues from the agencies/universities to pay for the bonds.
But as quickly as lawmakers move at session’s end (Thursday is the last day, so HB9 must pass the House and Senate by then), there were concerns by some House members.
“This bill is very important to these institutions,” said Froerer. “They are committed to building them.”
As UtahPolicy reported previously, more and more public university officials are lining up big cash donations for specific building projects – and using those promised gifts to convince, some may argue bribe, legislators and Herbert to approve construction-matching monies.
Sometimes the donors say they will withdraw their financial pledges if university buildings they wish are not funded and built within a particular time frame.
It’s a question of what comes first, the chicken or the egg – private donations or state financial support, for each draw on each other, University officials tell UtahPolicy.
In questioning HB9, Rep. Jack Draxler, R-North Logan, an appraiser, said he had heard that USU did not have a formal appraisal before agreeing to pay $20 million for the student apartment complex. (The building would be assessed for property tax purposes by the Cache County assessor.)
“I asked, I haven’t seen one,” said Draxler.
The House circled HB9 until Froerer could answer some of the questions on the new revenue bond bill.
But it is expected to pass in some form before adjournment midnightThursday.