Now, two years after the measure first was introduced to create a privately funded, state-backed $100 million "fund of funds" to lure new, primarily out-of-state investors for fledgling Utah technology companies, a newly amended version of the Venture Capital Enhancement Act appears headed toward final passage.
Sponsored once more by Rep. Peggy Wallace, R-West Jordan, House Bill 179 on Jan. 26 claimed a 73-0 victory in the House. It entered this week with an endorsement from a Senate committee.
Sen. Scott Jenkins, the Plain City Republican carrying the bill in the Senate, sees no obstacles to quick passage. He predicted it could come up for a final vote as early as Friday.
From its initial drafts, the act's provision for "contingency tax credits" came under scrutiny as a potential violation of the Utah Constitution's prohibition on establishment of a private business by state government.
The bill provided that 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.
In October, the Utah Capital Investment Corp. - a quasi-public entity formed by the Legislature to oversee the fund - filed suit in Salt Lake City's 3rd District Court to clarify the dispute.
Richard Nelson, president of the Utah Information Technology Association and one of five directors of the UCIC, said Wednesday that issue should be resolved "by the end of the second quarter of this year" - about the same time the board expects to select a fund manager.
The lawsuit alleges the state auditor's office and the UCIC held up implementation of the fund because of the constitutional issue. It seeks a declaration of the act's constitutionality, and a court order to the board to carry out its various duties under the statute.
Both sides have sought summary judgment, expected within the next few months.
With the help of the legislative counsel and research staff, the act itself has been amended to further address the constitutional question, along with other technicalities.
Among the most recent changes are new limitations on the manner in which the tax credits are issued, registered, transferred and redeemed. The revisions also require the Utah State Tax Commission to verify validity of any such credits claimed.
If passed, Gov. Jon Huntsman Jr. has indicated he will sign the act into law, seeing its provisions as a complement to his economic development plans. He recently appointed his senior economic adviser, Chris Roybal, chairman of the fund's state oversight board.
bmims@sltrib.com
