So the Utah Capital Investment Corp. has filed suit in Salt Lake City's 3rd District Court hoping to clarify the dispute, and move ahead with the $100 million "fund of funds" created by lawmakers in March 2003.

The primary issue involves the otherwise privately funded pool's provision for "contingent tax credits." Under the founding Venture Capital Enhancement Act, if investments in the fund missed an established rate of return - and if the fund's own reserve account proved insufficient to provide the difference - investors could take a credit against their Utah taxes.

The suit alleges that defendants state auditor Auston Johnson and the Utah Capital Investment Board - operating under the Department of Community and Economic Development - have refused to carry out their duties because of concerns that to do so would amount to the constitutionally prohibited establishment of a private business by state government.

The lawsuit seeks a declaration of the act's constitutionality, and a court order to the board to carry out its various duties under the statute.

Richard Nelson, president of the Utah Information Technology Association and one of five directors of the plaintiff corporation, said Monday that litigation had long been planned - but the suit was finally filed to break the impasse in implementing the fund.

"[The dispute] had slowed the opportunity to fully put the fund of funds in place," he said. "This is to expedite clarification of the issues."

Will West, chairman of the fund, said such clarification is vital to pumping venture capital into the state's promising technology sector.

"We don't want to try asking investors for money when these questions are hanging out there," he said. "But the investors we have talked to are excited about what we are trying to do [with the fund]."

bmims@sltrib.com