Exclusive: How Utah leaders plan to spend billions of dollars in new COVID relief money

The cash is part of the $1.9 trillion American Rescue Plan Act passed by Congress in March

(Francisco Kjolseth | The Salt Lake Tribune) Sen. Jerry Stevenson, R-Layton speaks in 2019. Stevenson is working to determine how federal coronavirus funds will be spent in Utah.

Utah lawmakers are trying to figure out just how to spend more than $1.5 billion in federal money, which is set to arrive in a series of installments.

The cash comes from the $1.9 trillion American Rescue Plan Act passed by Congress in March. Utah’s allocation is equal to roughly 15% of the state’s $22.7 billion budget for next year.

The money is part of more than $8 billion from the federal government that’s set to flow through the state in the coming years. But don’t expect a spending spree. It’s expected to arrive in two or three waves and lawmakers have until 2024 to spend it. Rules on what kind of projects funds can go toward will limit how it is used.

Still, there’s a significant opportunity to support long-term projects that otherwise would not have been possible.

“We’re not in a big rush here,” says Rep. Brad Last, R-Hurricane, who is House chair of the top budget committee. “We’re not going to just throw things at the wall. We want to be careful in how we do this.”

How it will be spent

Lawmakers are set to meet in a special session in May to start accepting and allocating the federal funds.

Legislative fiscal analysts say Utah is will receive approximately $1.52 billion in “state fiscal relief” and another $135 million for capital projects related to the public health emergency. Gov. Spencer Cox must call the special session instead of lawmakers initiating it themselves because of the amount of money involved. Cox’s office tells The Tribune it is targeting May 19 for the special session.

Legislative leaders have started to reach out to the individual appropriations committees to start soliciting ideas for projects.

A list of 10 “guiding principles” will direct those spending proposals. The top item on the list urges a focus on long-term challenges for the state. Others include a focus on a statewide benefit or a project that otherwise would not get funded.

ARPA guiding principles from Utah legislative leaders

“We need to have a statewide perspective with this,” said Sen. Jerry Stevenson, R-Layton, who is the Senate budget lead. “We need to give taxpayers a good bang for the buck. We can look at some projects larger than we would be able to otherwise.”

Lawmakers are also keen to avoid using the money for ongoing programs, since it’s likely the money will eventually run out.

There’s a long list of things this money can, and can’t, be used for. For instance, lawmakers can’t throw this money at Utah’s chronically underfunded schools and they can’t use it to cut taxes, either directly or indirectly. But they can spend it on industries that suffered economically from the COVID-19 pandemic. Infrastructure projects - think water, sewer and broadband - are also permitted.

A number of suggestions have attracted the attention of budget leaders. They include water projects in rural Utah, making Utah’s food supply more sustainable and improving technology infrastructure for state agencies. It’s possible the cash could go to updating the state’s Olympic venues, which would bolster a bid to host another Winter Olympics in 2030 or 2034. There’s also a suggestion to put a food bank in San Juan County.

Any proposals will have to make an impact either regionally or statewide. Don’t expect the money to fund hyper-local projects.

In addition to the cash coming to state government, county and local governments are set to reel in another $1.09 billion from federal government. Lawmakers say that presents another opportunity for state and local entities to partner on regional projects, which would make their dollars go further. For instance, Salt Lake City’s share is estimated to be $87 million, West Valley City could see another $28 million while Salt Lake County can expect $225 million.

“What if they determine water metering is a worthwhile investment to help save water?” Stevenson said. “That’s a project that’s heavy and hard to fund. But, if the state and those local governments each put in some money, then it’s easier to make that happen.”

Said Last: “If we can creatively partner with local government entities, we can do a lot more.”

External partnerships

There are even preliminary discussions about the possibility of partnering with private companies to tackle issues like homelessness or affordable housing.

There’s a concern that pumping a bunch of money into big projects could lead to inflation, a development legislative leaders are keen to avoid.

“Even buying computers could cause the price to spike,” Last said. “We have to be very careful and spread a lot of this spending out.”

If Congress passes an infrastructure bill, some projects that might be funded by the COVID relief money could fall under another spending program.

Lawmakers say they’ve been pleasantly surprised that Gov. Spencer Cox’s administration is on the same page.

“They came up with a list of priorities that was very similar to ours,” said Rep. Jefferson Moss, R-Saratoga Springs. “It was interesting how closely we were aligned. It’s a united front at this point.”

While lawmakers have three years to spend the money, budget leaders may make some spending decisions as early as this summer if they identify an urgent need.

“It’s amazing to have this opportunity,” Stevenson said. “We’re able to consider this because we’re in a good spot economically. A lot of other states aren’t in the situation we’re in.”

Utah’s financial health is good. The state’s unemployment rate is one of the lowest in the nation, and lawmakers avoided dipping into the state’s reserve funds when cutting budgets at the start of the COVID pandemic last year. In fact, Utah’s rainy day funds are full, with about $850 million in reserves.

Despite rosy economic conditions, lawmakers are acutely aware that the federal money coming to the state puts a financial liability on the future.

“I am worried about pushing so much debt on future generations with this much debt,” Last said. “We have to make sure we’re doing things with this money to put us in a better economic situation so they’ll see a benefit in the future.”