SALT LAKE CITY — While Utah lawmakers are focused right now on slashing the state budget by up to $2 billion next month, their long-term plans for dealing with the economic impact of the COVID-19 pandemic could include bonding for major projects beyond the Wasatch Front.
“There’s a lot of bonding capacity not being used right now,” House Speaker Brad Wilson, R-Kaysville, told the Deseret News. “It could be this year where we decide to invest in infrastructure in rural Utah” as well as the more-populated areas of the state.
With more than $3 billion in untapped state bonding capacity available, the speaker said launching “significant” projects similar to the massive I-15 rebuild through Utah County during the Great Recession could provide Utahns with a much-needed financial boost by creating jobs.
Using state bonding to pay for stimulus projects will be recommended in what will be the fourth version of Gov. Gary Herbert’s “Utah Leads Together” plan for dealing with the deadly virus, due out by early June, said Derek Miller, chairman of the governor’s Utah Economic Recovery Task Force, and Salt Lake Chamber president and CEO.
“We do need to turn our attention both at a national level as well as at a state level on what that economic stimulus looks like. Using bonding capacity and doing building projects is a great way to have that kind of economic stimulus,” Miller said.
He said the plan, focused on economic recovery, likely won’t recommend a specific amount of state bonding but will suggest types of projects. Those are expected to include tourism-related infrastructure such as state park improvements, Miller said, to help boost an industry hard-hit after COVID-19 put a stop to most travel.
Bonding could also be used to enhance fiber optic networks throughout the state to accommodate what in many cases could become a permanent shift to working from home. He said instead of bonding to improve freeways as was done during the recession, the state would be borrowing to “support the backbone of teleworking.”
And there’s also more the state can do, Miller said, including giving Utahns a tax “holiday” by suspending the sales tax on food, a proposal backed by one of the four Republican candidates running for governor, former Utah GOP Chairman Thomas Wright, during a recent forum sponsored by the chamber.
“What we’re talking about is economic stimulus,” Miller said. “You can do economic stimulus in very big ways, like bonding. But you can also do economic stimulus in a very targeted, pointed way, which is to provide stimulus directly to families and households. That would be a way you could do it.”
He said the state could use rainy day funds to cover the lost revenue. However, Miller said it’s too soon to say whether suspending the sales tax on food will be among the recommendation in the governor’s plan. A third version of the plan is expected next week, although work on the fourth version is already underway.
Miller, who served as Herbert’s chief of staff, said now is the time for the state to be dipping into reserves.
“We’re fiscally conservative precisely to be in a strong position at times like this,” he said. “Why do you save money? It’s so you can spend it when you need it. It’s not just to be able to look at a bank statement or in the state’s case, a report from the fiscal analyst, and say, ‘Woo-hoo, we’ve got X billion dollars in the bank.”
Both Wilson and Senate President Stuart Adams, R-Layton, said it could be a while before lawmakers take up the issue. Lawmakers are set to begin holding meetings on budget cuts after Memorial Day in anticipation of a special legislative session in mid-June to put the reductions in place before the new budget year begins July 1.
Another special session that would likely be called by lawmakers themselves is being planned for July, to deal with a range of policy issues related to the pandemic, including privacy concerns about contact tracing and tightening controls on no-bid contracts issued in an emergency.
Adams said bonding for stimulus projects may need to be considered later this year depending on how the economy performs as restrictions intended to stop the spread of COVID-19 are eased.
“That’s an option we’ll probably look at,” the Senate president said, noting the state ended up saving money on the I-15 project by building during the downturn. “I’m not sure we’re there yet, but bonding for infrastructure projects is a tool that’s in the tool belt. I’m not sure we’ll use it right now.”
Adams said he’ll be watching to see whether the state’s unemployment rate improves. For now, he said, all new state building is on hold, aside from the state prison being built near Salt Lake City International Airport that’s also being rebuilt, but not with state money.
Wilson raised the possibility of bonding for recreation needs that are key to the tourism industry. He also brought up assisting nonprofit organizations like the Utah Shakespeare Festival in Cedar City that recently canceled this year’s season.
“I just know they’re suffering,” the speaker said, also suggesting it could be some time before any projects get underway.
“We will ensure we have a plan for the fall,” Wilson said. “So at the same time we as a state adapt to the new world that we’re in and try to provide confidence and clarity and maybe even some stimulus at the right time, we’ll also make sure we’re more prepared for the next wave” of the virus.
Senate Minority Leader Karen Mayne, D-West Valley City, said building means jobs.
“We want to make sure people are working. Every tool should be made available. Every pool of money should be looked at,” Mayne said. “Yes, we need to cut but are we hurting the economy and hurting the wages of those who should be employed?”
When she talked about bonding during a recent meeting of the Legislature’s Executive Appropriations Committee, Senate Budget Chairman Jerry Stevenson, R-Layton, said the construction industry doesn’t need stimulus and that it “might not hurt to let it cool off.”
Natalie Gochnour, an associate dean in the David Eccles School of Business and director of the Kem C. Gardner Policy Institute at the University of Utah, said “there is a significant opportunity for what comes after COVID,” in part because of the state’s ability to bond.
Spending money is “a sign we’re investing in the future. We have belief in the future. We believe that we have the ability to control our own destiny. So I think it sends a very positive signal when the state makes strategic decisions about shaping economic activity,” she said.
Without big public and private projects like the I-15 rebuild through Utah County and the construction of City Creek Center and the National Security Agency’s Utah Data Center, Gochnour said Utah wouldn’t have been able to get through the Great Recession better than most other states.
Now, “with low interest rates and an available workforce, it’s a really good time to invest where you can,” she said.
“I think one that you’ll see, for example, is tourism infrastructure. If you think about it, we have a visitor economy that’s taken a blow. Travel is not going to be what it was. So what are the possibilities, while we have less activity, less visitation, to go in and invest in this very important industry,” Gochnour said.
That could mean building more campgrounds in state parks and putting in more infrastructure, she said, as well as making improvements to attract tourists to places like Emery and Carbon counties that were already looking to diversify their coal-based economies.
“I think what would be wrong is to just hunker down,” Gochnour said. “I think it’s right for state leaders right now to be thinking months ahead. This rebirth of the economy is the right thing to focus on, how do we do it in a way that best serves the citizens.”