Utah House narrows bond rules in amended HB401 after heated debate over revenue bonds

SALT LAKE CITY — The Utah House of Representatives on Feb. 26 passed a revised Substitute House Bill 401 that folds certain revenue bonds into the same statutory 20%-of-appropriations limit that already applies to general obligation (GO) bonds, a change supporters said will force the Legislature to confront total indebtedness.

Sponsor Representative Olson told colleagues a handout reviewed trends showing GO bonds had fallen since 1991 while revenue bonds had risen since 1993 and were “replacing GO bonds and it's costing the state money.” He said the revenue-bond provision in the substitute bill is written to take effect in 1998 so the Legislature can examine bonding as a single package and not be immediately constrained this year. “Restraint on government is good,” Olson said.

Opponents and amendment proponents pressed competing priorities. A member moving an amendment printed on a pink sheet dated Feb. 26 argued the revenue-bond language should be removed and studied by the Executive Interim Appropriations Committee, saying the provision could put the Legislature “out of compliance” if left in. Representative Johnson urged colleagues to reject that amendment, saying he felt “very, very uncomfortable” with removing the provision because doing so would relieve pressure to act.

Members disputed which types of revenue bonds would be covered. Olson clarified that issuers such as the Utah Housing Finance Agency, the State Board of Regents and higher-education institutions were not included in the list of bonds to be swept in; the bill targets bonds that were authorized by the Legislature and intended to be paid with state-allocated funds. Olson also corrected an earlier figure, saying the amount available to bond in the next session would be about $93.3 million.

The House first voted on the Stevens amendment to remove the revenue-bond section; the clerk announced a tally of 20 yes and 52 no, and the amendment failed. A subsequent amendment that changed the bill text on page 10 to include all revenue bonds (deleting limiting words as described on the pink sheet) passed on a later roll call, announced as 39 yes and 34 no. After debate and final summation from Olson, the House passed the substitute bill itself by voice and roll call; the clerk announced the final vote as 59 yes and 14 no. The bill now goes to the Senate.

Supporters said the measure forces the Legislature to set priorities and consider all state-backed debt together; opponents warned that restricting revenue bonds could shut the door on projects that depend on non-GO financing and observed that current commitments and rising construction costs risk making a cap binding in practice.

The bill text in discussion includes an effective-date structure: most of the act was noted as taking effect July 1, 1996, but the revenue-bond section was described in floor debate as taking effect July 1, 1998, giving the Legislature time to study and act in the next session.

What happens next: HB401, as amended, is transmitted to the Senate for consideration; supporters and opponents indicated follow-up study and committee work will continue as agencies and the Legislature parse which revenue instruments will be covered and how to prioritize capital needs.