The state may stop leasing space in the new government complex in Provo, causing construction bonds to default, if voters approve three tax-limitation measures in November.
Neal Stowe, state director of facilities and management, said Monday he will likely have to cut the $182,000 budgeted for the lease if tax revenues are severely cut.The $30 million complex, which houses county and state offices, was built with a bond issued by the Utah County Building Authority and backed by the state. The authority is counting on the state's lease payments to pay off the bonds.
If the money is not repaid, the state's triple-A bond rating could suffer. Standard & Poor's already has put Utah on a "Creditwatch" list because of the initiatives - meaning the state is in danger of losing its good credit rating.
Stowe's recommendation is one of several being submitted by state administrators in response to a request from Gov. Norm Bangerter.
Last month, Bangerter asked each state department to prepare a budget as if the initiatives had passed. He asked directors to cut 13.5 percent from amounts currently being spent - the amount he said budgets would be hampered during the first fiscal year the initiatives take effect.
The initiatives, heavily favored by voters in opinion polls so far, would roll state income taxes back to their 1986 levels, cut property taxes to no more than .75 percent of the value of a home and 1 percent of the value of a commercial building, and provide tuition tax credits to parents whose children attend private schools.
When he asked for the budgets, Bangerter specified he wanted realistic cuts and that vital services should be preserved if possible. Proponents of the initiatives have accused the state and other local governments of using scare tactics to persuade people to defeat the measures.
Other noteworthy recommendations turned in so far are that the Hogle Zoo lose $85,590 of its state support, necessitating the loss of some animals, and that the Utah Travel Council lose $461,835. Jay Woolley, director of the council, said the cut could mean the state would lose close to $100 million in tourist revenue.
Notwithstanding the recommendation, if the initiatives are passed, the Legislature would ultimately decide where cuts are made.
Stowe, who recommended cuts throughout his budget, said it would be hard to avoid cutting the lease payments at the Provo center.
"If you make one area (of the budget) whole, you would cost some other area a 26 percent cut," he said, noting he recommends some smaller agencies be combined to save on lease costs.
Much of the state's facilities and maintenance budget is used to clean, fix and maintain state buildings. State employees may have to adjust to fewer regular office garbage collections and to enduring with broken items that may never get fixed, he said.
"There is 30 million square feet of space I'm responsible for," Stowe said. "It's already there. We have to take care of it."
Stowe said he also recommends some employees be laid off and that the department hire more private companies to perform jobs it now does. With fewer workers, the department would be unable to inspect and monitor the construction of state buildings as carefully as it does now.
He recommends $1.2 million be cut from the $9.4 million being spent to improve and fix state buildings. Requests for improvements exceed $50 million yearly.
"We will be substantially exposed to liabilities," Stowe said. "We may have to shut down portions of some buildings."
The Provo complex, built by Jacobsen Construction Co. and developed by Boyer Co., comprises a 132,000-square-foot regional state office building and a 90,000-square-foot county building. Several county and state offices have been centralized and consolidated in the complex.
Officials said about 350 state employees will work in the new state building, which will include offices for the Department of Education's Division of Rehabilitation, Department of Administrative Services, Adult Probation and Parole, Tax Commission, Department of Health and the Department of Social Services recovery services and community operations divisions.