Could UTA’s $2.1 billion debt now belong to the state? Most say no.

(Rick Egan | Tribune file photo) Lawmakers and state officials debated Wednesday whether UTA's $2.1 billion debt now is a state problem. Most said it is not. This Jan. 30, 2019, file photo shows the Capitol Connector, route 500, as it picks up passengers at the Utah state Capitol.

Legislators are wondering if reforms they passed inadvertently converted the scandal-tainted Utah Transit Authority into a state entity — instead of an independent local district.

State Auditor John Dougall raised that question, which made some lawmakers worry it might mean that the state would need to assume UTA’s huge $2.1 billion debt — amassed as it fast-tracked construction of its TRAX and FrontRunner train systems.

A wide array of officials, including representatives from the Utah Attorney General’s Office, told lawmakers Wednesday that the state is not on the hook for that debt. But they said the Legislature still should figure out whether UTA is under state control because it affects the accounting and financial statements of both entities.

Dougall told the Transportation Interim Committee that when lawmakers gave the governor power last year to appoint or fire all of three UTA board members, that likely made it a state entity — with some independence but under state control. That would make it akin to the Utah State Fair Corp. or the School and Institutional Trust Lands Administration that generates funds for schools with the sale or lease of state lands.

Dougall argued the conversion happened — although UTA’s lawyers disagree — even though lawmakers included bill language that said UTA remains a local district and they ordered a study about whether UTA should become a full state agency, similar to the Utah Department of Transportation.

“You clearly said it’s not a state entity,” Dougall said. “But it acts like a state entity” because Gov. Herbert controls the appointments to the board, and went so far as to exercise the right to reject initial nominees submitted last year by counties.

Dougall likened the situation to a question that Abraham Lincoln once asked. “If I tell you that the tail of a dog is a leg, how many legs does a dog have? It still has four, no matter what you call it.” So he said UTA is really a state agency unless lawmakers enact changes.

These could include taking away the governor’s ability to appoint the UTA board, but Ron Gordon, general counsel to Herbert, told lawmakers that the governor would oppose that.

Several legislators asked whether the state is now responsible for UTA’s debt, especially worrisome if it ran into trouble keeping up with its payments. Lawyers from UTA, Dougall and others said they doubt that.

“The state would be no more responsible for paying UTA’s debt than it would be to pay the debt of the Washington County Water Conservancy district, for example. It’s a local district, a separate entity,” said Mark Burns, a deputy Utah attorney general who acts as a lawyer for UTA.

Because the state has no liability for UTA’s debt, Burns said whether UTA is technically a state entity doesn’t matter much in practical matters — it may just mean that the state has to include UTA’s finances in its own annual reports, as it does with other agencies from the Heber Valley Historic Railroad to the Utah Dairy Commission.

Sen. Wayne Harper, R-Taylorsville, said he already has started a cleanup bill to adjust some UTA reforms. He said he would look at the issue of whether being a state entity makes much difference and will include any needed changes in that legislation.

UTA covers six counties along the Wasatch Front. Most of its money comes from sales tax for transit, but about 11% comes from fares. It receives no state tax money for operations, but is eligible for a share of money for construction of projects if approved by the Utah Transportation Commission.

Lawmakers ordered reforms after news stories and audits complained about high executive salaries, extensive international travel, lack of transparency and sweetheart deals with developers.

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