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Legislators made an unusually generous deal last week for four rural counties when they approved a $53 million fund-swapping scheme to help build a deep-water port in Oakland, Calif. in the belief it will help sell Utah coal overseas.
Lawmakers did not charge the 15 percent premium typically imposed on such swaps of state money (which has virtually no strings attached for use) for federal money.
As compensation for taking over the headaches that come with the red tape surrounding federal money, the Utah Department of Transportation has a long-standing policy to give only 85 cents on the dollar for such exchanges with local governments.
But the coal-port money swap involving UDOT is a straight dollar-for-dollar exchange, with no premium charged.
"Nobody had any questions about that," UDOT Executive Director Carlos Braceras said, referring to debates on the bill pushed through the legislative session in just eight days and approved in its final hours.
Braceras explained in an interview Wednesday why UDOT has made such deals for about 10 years, and why local governments seek them.
He said they often allow local governments to avoid more extensive environmental reviews, requirements that all materials be made in America, higher wages required by the federal Davis-Bacon Act and sometimes-stricter federal design rules.
UDOT meets those tougher requirements "on every project, and we do it all the time," Braceras said.
For local governments, "they get maybe one project every three, four or five years" with such requirements — so they find it actually saves them money to trade away the federal funds even at a premium.
"It's a win-win" because it also gives the state a bit more money, Braceras said.
He said recent swaps involved several cities in south Davis County, Cedar City and Garfield County. The Utah Transportation Commission may approve one this week in Uintah County. And UDOT is reviewing a pilot project to make ongoing swaps in Utah County through the Mountainland Association of Governments.
All of those swaps have been, or will be, for 85 cents on the dollar.
So was the dollar-for-dollar coal port swap fair?
"I think they [legislators] thought it was fair," Braceras said. "As I listened to debate, this seemed more about helping to enable a local decision."
He also said the only requirement he could find attached to the CIB money UDOT will receive is that it be spent in a mineral-producing county.
They include coal and oil areas, but even Salt Lake County because of copper. He said UDOT has plenty of projects in those areas that could utilize the swapped money.
He said UDOT was asked by legislative staff if the swap would bring extra costs as it prepared a "fiscal note" on the legislation.
"We couldn't justify any kind of a fiscal impact because the money didn't carry any extra requirements for what we do as a state other than to make sure we had the cash flow with the right projects," he said.