A borrowing binge several years ago put Utah deep into debt and, while the amount of money the state owes is tapering off, it remains well over $3 billion — $1,063 for every Utahn — considerably higher than it should be, according to Utah’s top money manager.
From about 2009 to 2011, the state racked up hundreds of millions of dollars of debt, mainly by issuing bonds to build highways, particularly the reconstruction of Interstate 15 through Utah County.
At its peak, Utah had more than $3.8 billion in outstanding bond debt. Utah State Treasurer Richard Ellis told lawmakers Tuesday that the state is paying nearly $500 million to service its debt each year, with the total debt load dropping each year.
"It’s really getting out to 2018 to 2019 before we see a significant drop in the level of debt-service payments," Ellis said.
Currently, the state has about $3.5 billion in outstanding debt obligations. The $1,063 owed for each Utahn is down from the peak of $1,221. That means Utah continues to have one of the highest per capita debt of any state with a AAA bond rating — the best credit rating available.
Ellis said the rating agencies frowned upon the amount of debt Utah racked up during its spending binge. He said he recommends the debt-per-person level should be about $850, which, if it remains on the current trajectory, the state will reach in 2016.
The debt figures do not include bonds issued by other governments, school districts, special service districts and other taxing entities.
Senate Budget Chairman Lyle Hillyard, R-Logan, said he doesn’t think it was a mistake to bond for the I-15 rebuild, given how much road they were able to reconstruct given the money available.
"I think the problem we had is we haven’t been able to control ourselves since then," he said. "We bonded for things that I think were nice to have, but if we’d shown some self-control and not bonded after [I-15] and given us a couple years to pay our bonds down, we’d be OK. I think we’re getting there now."
Hillyard said that now people are talking about wanting to issue bonds to rebuild and relocate the state prison from its current location in Draper. The problem, he said, is the state doesn’t have the ability to do that because of the outstanding debt.
"If we had a major earthquake, we’re in trouble. We wouldn’t have the bonding capacity to rebuild and we couldn’t raise taxes enough to do it," he said.
On the current trajectory, with a few years without issuing bonds, Hillyard said he expects the state to be in a much better position.
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