State lawmakers have learned some hard lessons about keeping one's word.
Contracts, handshakes and verbal assurances proved expensive to taxpayers Wednesday as the the Utah Legislature forked out nearly $12 million to settle disputes that could have been avoided had things been written out so as House Speaker Marty Stephen said "it's clear what is meant and what is expected."
Legislators held their noses while giving up nearly $10 million to get out of what one House member called a "foolish, idiotic boondoggle."
And that wasn't the only bitter pill an incensed Legislature forced itself to swallow in a 10-hour special session Wednesday.
It ponied up another $1.57 million to settle a potential lawsuit with a company whom state corrections officials led to believe would get the contract to build a private prison in Grantsville.
Settling out of court, state leaders say, saved Utah potentially tens of million of dollars.
But Stephens said state government agencies need "be more careful" in how the deal with contractors. The spoken word isn't good enough. "That's what got us in trouble," he said.
Gov. Mike Leavitt convened the Legislature mainly to resolve a 30-year dispute over governance of Utah's applied technology centers, which was settled by creating the state's 10th college — the Utah College of Applied Technology. But in the days before and even during the session, the list of proposed bills and resolutions swelled to 18.
All but one passed, including a controversial measure removing the state tax exemption on income from municipal bonds issued by non-Utah entities. Legislators approved two Olympics-related bills.
One reduces vehicle registration fees from more than $200 to $35.50 for cars automakers provide for sporting events. General Motors anticipates supplying 4,500 vehicles to shuttle athletes, officials and dignitaries during the 2002 Winter Games.
The other exempts rental property owners from transient room tax if they let their units fewer than four times a year. Many residents intend to rent their homes or condos to Olympic visitors.
Lawyer bashing turned into legislators' favorite sport while deliberating a $9.95 million settlement offer to the Salt Lake law firm that represented Utah in the lawsuit against big tobacco companies.
Former Democratic attorney general Jan Graham retained Crockett, Bendinger, Peterson & Casey on a 25 percent contingency fee contract. Utah stands to get nearly $1 billion over 25 years in the multistate settlement with cigarette makers, meaning the firm was entitled to $250 million.
An arbitration panel awarded Crockett, Bendinger $65 million but the firm filed a lien against the state for the contingency fee as well. Rather than go to court, Republican Attorney General Mark Shurtleff negotiated a settlement.
Attorney Steve Crockett called the deal "fair."
"We gave up a lot," he said. "But we always said we wanted to do something that was reasonable for both sides."
Legislators were appalled the firm would seek more than the $65 million despite only having filed two briefs and attended three hearings.
"They're going to get $10 million for a result they didn't bring about," said Rep. Scott Daniels, D—Salt Lake, who voted against the resolution as did most House Democrats. The Senate overwhelmingly approved it.
Republicans blamed Graham for what Rep. James Ferrin, R—Orem, described as a "foolish, idiotic boondoggle."
"Gadzooks, I wonder who was representing the interests of this state," he said.
Some lawmakers said the state should have taken its chances with a jury.
But lawmakers were reminded the state was bound by a contract. "In law, there is no greedy lawyer defense to a breach of contract claim," said Shurtleff, who said resolving the matter saved the state as much as $175 million. He sees it as "you can fill a cavity now rather than pay for a root canal later."
Settling with Cornell Corrections Corp. was no less painful for lawmakers who grudgingly coughed up $1.57 million to settle a dispute over the abandoned private prison project.
Though it never signed a contract, the state Department of Corrections gave Cornell written and verbal instructions to build a 500-bed minimum security facility outside Grantsville. VCBO Architects and Hogan Construction spent 14 months designing and doing site work.
The state scrapped the project last year when prison recidivism declined and Utah's crime rate dipped. Cornell demanded to be paid for the work and threatened to sue if it wasn't. Five months of negotiations ensued.
Sen. Ed Mayne, D—West Valley, said the state is setting a bad precedent, noting a contract was never signed or documented. Prison officials, he said, made some "terribly poor" management decisions.
"I think we owe them something," Mayne said. "But I'm telling you $1.5 million is too much."
Investors in municipal bonds bought outside Utah believe they will be paying too much on interest income once the state starts taxing it in 2003. The Legislature removed the long-standing exemption on out-of-state bonds.
"It's a new tax," complained Sandy resident Barrie McCullough, who said he has invested in muni bonds for 25 years. "Once we get a new tax, it never goes away."
Leavitt, under pressure from investors, vetoed a similar legislation in March after the regular legislative session, saying it didn't get enough debate. He said he will sign it this time.
Bill sponsor Rep. Greg Curtis, R—Sandy, said the exemption is needed to make Utah-issued bonds more competitive in the marketplace. Utah was one of only two states that don't tax its own bonds. "I don't want to subsidize tax exemptions" in other states, he said.
The new version included a reciprocity clause, however. States that don't tax Utah bonds won't have their bonds taxed.
Contributing: Bob Bernick Jr.
E-mail: romboy@desnews.com