Opinion: SB337 would take us further down the road to a state-controlled economy
How quickly they forget. It is astonishing how far Utah's Republican supermajority has strayed from its spiritual roots. Conservatively, its various development authorities have already used nearly $5 billion in government subsidies to steer over $15 billion in capital investment away from free-market outcomes. This reduces efficiency, misallocates resources and increases prices. In the current legislature session, the supermajority proposes a radical escalation of its campaign to remake our state's commercial real estate and energy markets. If it succeeds, those markets will be shaped more by legislative fiat than by the 'invisible hand' of competition.
When our Republican supermajority and governor pursue non-market outcomes, they work through various development 'authorities.' These authorities create zones called Project Areas within which developers receive tax subsidies. Within Project Areas, subzones are created called Public Infrastructure Districts. PIDs issue bonds and obtain government loans, both at below-market-rates because they are backed by local tax revenue. Utah has over 138 PIDs and counting.
Unfortunately, authority decisions to distribute these financial gifts to specific developers and specific projects are not made objectively by the 'invisible hand' of free markets, where all the needed information is open and public. Their decisions are unavoidably political. Legislators (or their proxies) sit on authority boards to influence where development zones will be established, which private developers and which projects will benefit from tax subsidies, and which will obtain below-market-rate loans. Typically, these decisions are being made by non-experts behind closed doors, heavily influenced by developers whose private interests are at stake. What could possibly go wrong with such a process?
The governor and legislative leaders now propose creating yet another authority to intervene in Utah's energy markets. HB249 would create a Utah Energy Council dominated by the Legislature's appointees. The council would formulate state energy policy, create 'electric energy investment zones,' and oversee an Electric Energy Development Investment Fund. Through this fund, legislators would influence which transmission lines, energy storage facilities and related infrastructure get subsidies.
HB249 has other important anti-market features. It would establish a consortium overseen by the Office of Economic Development to promote nuclear power over renewables, despite the high costs, technological uncertainty and decades-long lead times that plague nuclear projects. This statutory bias against renewables would reinforce another one adopted in 2024 which arbitrarily pressures Rocky Mountain power to choose coal over renewables. Compare this government-dominated approach with competitive markets for grid-scale power generation. There, 90% of buyers choose renewables paired with battery storage because this combination provides more reliable base load power than aging coal plants, has much shorter lead times than nuclear, costs less than either and protects our health and our climate.
Monday of the last week of the session, our legislative leaders filed substitute SB337. It comes close to abandoning free markets altogether. It proposes to create what amounts to an 'authority of authorities.' This bill would establish an Economic Opportunity Coordinating Council that would function as an unconstitutional standing legislature with broad powers to choose which growth path that Utah's economy will take, what economic sectors Utah's taxes will subsidize, what technology a given sector should adopt, what firms will be chosen to build out that technology and where those buildouts will be located.
To implement the Council's policy, its Chief Executive Officer could decide which of Utah's geographic zones will be spared and which will be covered with asphalt and concrete using just a map and a magic marker. He could then order the proposed new Beehive Development Authority to reach into its bag of tax subsidies and make it happen.
SB337 is a 147-page bill that alters over 100 provisions of current law that took months to draft. It is inappropriate to spring a bill granting such sweeping powers to new government agencies in the last week of the legislative session, rushing it through under suspended rules. SB337 is not ready for decision. It should be withdrawn and resubmitted in the next legislative session, early enough to receive the close scrutiny it deserves.
Our Republican state leaders insist on expanding state control over our economy despite their professed 'small government' beliefs. They seem happy to abandon the bedrock conservative principle that an 'invisible hand' guides free markets to an optimal result. The development authorities they have created are becoming arbitrary and secretive shadow governments. Their reliance on subsidies leads to an oversupply in the areas subsidized, reduced efficiency, higher costs and a more polluted environment. Ask your legislator to listen again to Ronald Reagan, reread Adam Smith and oppose both HB249 and SB337.
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