Interlocal GO-bond authority fails after debate over taxpayer safeguards

The House considered House Bill 330, which would have allowed interlocal entities to issue general obligation bonds for three narrow purposes (water, sewer and public safety). Representative Anderson, the sponsor, said the first substitute tightened bonding authority by requiring interlocal governing boards be composed exclusively of elected officials, forbidding defaults by member entities, tying bonding responsibility to assessed property values and preventing interlocals from expanding member entities' bonding limits.

Representative Webb offered an amendment to clarify that a withdrawing member's liability and taxing power remain with the interlocal entity until the bond is paid; the floor adopted that amendment. Representative Sagers raised concerns about a recent special service district default in Summit/Wasatch counties and whether the bill would enable a similar default. Anderson responded that GO bonds would be tied to a property tax (a guaranteed revenue source), involve a three-step approval process (interlocal board, unanimous member-entity approval, then voter approval) and therefore reduce default risk.

Despite sponsor assurances and an adopted amendment, the first substitute failed in the House by a vote of 30-42 and the bill was referred to staff for filing. Representative Anderson emphasized the goal of lowering long-term financing costs for taxpayers and ratepayers through access to GO bonds but acknowledged the House rejected the measure.

Next steps: HB 330 was not adopted by the House in its first-substitute form and will not advance unless reintroduced or otherwise revived through staff or committee action.