Cash or charge? Utah Legislature eyes budget surplus to fund new prison construction without bonding

(Chris Detrick | Tribune file photo) Land near 7200 West and I-80 in Salt Lake City Tuesday August 11, 2015. The Prison Relocation Commission unanimously recommended building a new penitentiary west of the Salt Lake City International Airport.

Both sides of the Utah Legislature voted unanimously Monday to appropriate $235 million for construction of a new state prison in Salt Lake City, a move that could offset potential bonding and save the state in interest costs on the $692 million project.

Sen. Jerry Stevenson, R-Layton, said lawmakers had already authorized up to $285 million in bonding for the prison relocation project. But new state revenue numbers released Monday show roughly $1.2 billion surplus on hand, allowing for a cash payment on construction in lieu of credit, he said.

“We feel like there’s the cash there to take care of that,” Stevenson said.

Rep. Bradley Last told fellow House members that using cash instead of credit would be a wise financial decision.

“I think this is a very prudent way to handle the situation,” Last, R-Hurricane, said.

The legislation cleared the House by a vote of 67-0.

Gov. Gary Herbert announced the new consensus budget surplus estimates on Monday, which showed roughly $675 million in ongoing funding and $646 million in one-time funding.

Herbert suggested the surplus funding should be prioritized for investment in public education, and to offer a tax cut to Utahns.

“I’m grateful for the strong economic performance that has created this revenue growth," Herbert said. "As we head into the legislative session, we look forward to investing a sizable portion of this money in education while also returning a sizable portion of these revenues to the taxpayer.”

The $1.2 billion in estimated revenue is “considerably higher” than legislators have worked with in recent years, Stevenson said. He said his bill would not add to the cost of the prison project, but would supplant hundreds of million dollars in potential borrowing with a cash appropriation.

Senators voted 26-0 for the bill. But Sen. Luz Escamilla, D-Salt Lake City, reiterated her position that the prison was wrongly located in her district — on the west side of Salt Lake City — which is a more costly construction site than other options considered by the state.

“It was wrong public policy,” she said, “and now we’re obviously seeing the aftermath with the continuous increase in cost.”

Tribune reporter Bethany Rodgers contributed to this report.