Utah Senate OKs fund-swapping scheme to help fund California port

By LEE DAVIDSON | The Salt Lake Tribune
First Published Mar 07 2016 09:51PM

FILE - A deep water port is under development at the former Oakland Army Base, pictured here in 2008 at the foot of the San Francisco Bay Bridge. Utah has loaned four coal-producing counties $53 million to buy into the project to guarantee export throughput for coal and other commodities produced in central Utah. But coal shipments might not be welcome in Oakland. (AP Photo/Bay Area News Group, Laura A. Oda)

‘Shell game’? » Critics question legality and wisdom of the proposal, now on its way to the Utah House.

The Utah Senate voted Monday to approve a fund-swapping scheme to spend $53 million in public money to help build a deep-water port in California with an eye to exporting Utah coal and other products overseas. 

Some senators called it a questionable "shell game" to advance a project that has sparked outcry in environmentally conscious California and from conservation groups.

But Sen. Stuart Adams, R-Layton and sponsor of SB246, third substitute, said the project is needed to help Utah's coal-producing areas survive, and it could also boost exports of other Utah products, from oil to alfalfa.
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He said residents in Utah's coal country "are invested in coal. Their economy is built on coal. Their jobs, their livelihoods and their families are dependent on coal. They see this as a great investment."

Senators voted 20-7 to pass SB246, and sent it to the House with just three days left in the legislative session. 

The bill would swap $53 million in state sales tax money now earmarked for transportation for an equal amount of federal mineral royalties given to the Utah Permanent Community Impact Board (CIB).

Last year, the CIB approved loaning the money to four rural counties to help pay for the development of the bulk-freight-loading seaport under development at the former Oakland Army Base.

The community impact fees are generated from mineral and energy royalties and intended to mitigate the impacts of federal mining on local communities. Typically, those monies have been granted or loaned for projects such as roads, public buildings, water and sewer systems or parks.

A pair of complaints was filed with Attorney General Sean Reyes by environmentalists challenging the legitimacy of using the funds to invest in an out-of-state port. Reyes and his office have declined to comment on the legality of the plan, but questions apparently have prompted the CIB to now ask the Legislature to approve the unusual swap. Sen. Jim Dabakis, D-Salt Lake City, said the attorney general "has been completely and absolutely silent" on this issue. Adams said he had placed one call to the attorney general and had not received a response.

Still, Adams said the swap he proposes "is cleaner and easier, and doesn't have the tentacles of federal money."

Senate Democratic leader Gene Davis, D-Salt Lake City, called it a "shell game."

"I don't understand why we feel it is important to take Utah tax dollars, dollars that are needed here in the state of Utah, no matter how we shift them around, to help build a port in Oakland. That seems like a real stretch."

Sen. Lyle Hillyard, R-Logan, complained that the proposal was a major, complicated idea that came out late in the legislative session, allowing little time for scrutiny.

Dabakis questioned why the port developer, instead of turning to private investors, were seeking money from Utah in exchange for exportation rights. "It may be a sign that it isn't that good of a deal," he said.

But Adams repeatedly said the plan presents "no risk to taxpayers," assuring that the $53 million will instantly be wired to the Utah treasury by the CIB as soon as the state money is allocated.

It should be up to the CIB board to decide how to use the funds, Adams said, suggesting the money would otherwise be spent on frivolities such as "splash pads."

The CIB in its last annual report said it spent $157 millon in grants and loans, mostly for roads, public buildings — including fire stations — and water and sewer projects.

Sen. Howard Stephenson, R-Draper, defended using community impact money to help coal country residents with this out-of-state project.
"If ever there is something to affect and impact these [coal country] communities, it is the continuation of those jobs, and the assurance that these products can be exported around the world to ensure that these towns don't become ghost towns," he said.
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Previously, Mark Clemens, director of the Utah chapter of the Sierra Club, called the move a "misappropriation" of public money to have taxpayers help build a port to export coal to a world market already saturated with the product
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"It just makes my head spin to think of the waste and stupidity of an undertaking like this at a time when coal mines are in such deep holes financially that it's entirely possible few of them will ever be able to do the necessary reclamation to close themselves down," Clemens said. "It's disgraceful."

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