Utah legislative panel discusses borrowing to get road work done
September 3, 2020
Utah state lawmakers next year are expected to return their attention to a transportation funding plan.
In the lead-up to the 2021 regular session, the Legislature’s Transportation Interim Committee is working through the pursuit of borrowing to help cover transportation costs. The panel is reviewing the pros and cons of a bond issuance to get work done.
Under consideration is borrowing $500 million for transportation projects that could include widening northbound Interstate 15 in southern Salt Lake County.
Advocates say now is the time to tap bonds to cover costs for Utah roads because interest rates are low. Additionally, they say borrowing would allow the state to get started and finish projects sooner.
Sales tax increase nixed
State lawmakers have spent much time over the past few years to come up with a funding plan to aid Utah roads and bridge work.
In December 2019, a 199-page bill was signed into law to raise the state’s sales tax on food, gas, and certain other services. The excise tax on diesel also was slated to increase by about 33%. Additionally, income tax cuts were included in the reform package – SB2001.
The additional tax collected on food, fuel and services was estimated to raise about $475 million annually.
A citizen referendum effort was launched shortly after passage to ask voters to nix the additional sales tax collection to cover expenses that include transportation work.
Once the referendum effort qualified for the Nov. 3 election, Utah state lawmakers reversed course on the changes and repealed the law. As a result, the Legislature this summer continues to discuss possible transportation funding solutions.
State Treasurer David Damschen recently told the panel during discussion on the benefits and costs of bond issuance that low interest rates are one advantage to pursuing the option.
He added that the state’s debt level is reasonable. As a result, Damschen said there is room to borrow more without sacrificing the state’s AAA bond rating.
The committee could take the issue up for additional consideration during a meeting scheduled for Sept. 16.