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Business, Labor, and Economic Development Interim Committee


MINUTES OF THE

BUSINESS, LABOR, AND ECONOMIC DEVELOPMENT INTERIM COMMITTEE

June 17, 1998 - 2:00 p.m. - Room 403 State Capitol


Members Present:
    Sen. L. Steven Poulton, Chair
    Rep. Peter C. Knudson, Chair
    Sen. David L. Buhler
    Sen. Eddie "Ed" P. Mayne
    Sen. Michael G. Waddoups
    Sen. Blaze D. Wharton
    Rep. Gerry A. Adair
    Rep. Eli H. Anderson
    Rep. Patrice M. Arent
    Rep. Afton B. Bradshaw
    Rep. Katherine M. Bryson
    Rep. Don E. Bush
    Rep. Wayne A. Harper
    Rep. Brad King
    Rep. Loraine T. Pace
    Rep. Glenn L. Way
    Rep. David L. Zolman, Sr.    


Members Absent:
    Rep. Steve Barth    
     Rep. Bradley T. Johnson

Staff Present:
    Mary Catherine Perry, Research Analyst
    M. Gay Taylor, General Counsel
    Beverlee LeCheminant, Committee Secretary

Note:    Names of others present and copies of information distributed at the meeting are on file in the Office of Legislative Research and General Counsel.

1.    Call to Order - Rep. Knudson called the meeting to order at 2:20 p.m.

2.    Committee Business -

     MOTION: Rep. Adair moved to approve the minutes of the May 20, 1998 meeting. The motion passed unanimously.

3.    Quasi-Governmental Agencies - Ms. Mary Catherine Perry, Research Analyst, gave an overview of quasi-governmental entities. She provided committee members with copies of her presentation.

    Rep. Bush said he would like more information on the extent of the state's liability and what authority the state has.

    Rep. Bryson indicated that she would like more information on the exemptions from state oversight and how it varies between the different quasi-governmental entities.

    Rep. Zolman stated that he would be interested in a recommendation from staff on a process to privatize governmental entities.
     MOTION: Rep. Adair moved that the committee study issues of the state's liability, exemptions from state oversight acts, and privatization as they relate to quasi-governmental entities. The motion passed unanimously.

4.    Utah Technology Finance Corporation (UTFC) - Mr. Brian Elwood, Law Clerk, gave an overview of UTFC.

    Rep. Keele Johnson stated that he believes UTFC is still needed in the state, but it needs to be renamed and its role reexamined. He suggested changing the role of UTFC to be a small business finance corporation aimed at providing loans to minority-owned and women-owned businesses and businesses in rural areas of high unemployment.

    Rep. Bill Hickman maintained that there may still be a mission for an agency of this type, but he does not think that, under its current configuration, UTFC is capable of accomplishing what the Legislature intended for it to accomplish. He indicated that he intends to move forward in developing legislation to eliminate the agency.

    Ms. Janice Coleman, Legislative Audit Supervisor, gave an overview of the performance audit of UTFC. She indicated that the Legislature asked the auditors to look at the following three issues: 1) Is UTFC meeting its statutory mission? 2) Does UTFC have effective internal controls? and 3) Do the allegations against UTFC have any merit?

    Mr. Duane Blackley, Acting Executive Director, UTFC, reported that UTFC and the board of directors requested the audit in November of 1996 and are pleased to respond to the Auditor General's findings and recommendations. Mr. Blackley explained that the audit report contains 15 recommendations for UTFC and 12 of those recommendations have already been adopted and are part of the organization's operating procedures. The board and management of UTFC believe that the recommendations have improved and strengthened UTFC's policies and procedures. Mr. Blackley stated that one of UTFC's primary goals is to open up a channel of communication with state officials and make it possible for the organization to discuss its policies and procedures openly with the Legislature.

    Mr. Lawry Alder, Trustee, UTFC, cautioned the Legislature to proceed carefully in its decision regarding UTFC. He stated that Mr. Blackley is committed, along with the board of trustees, to have the organization function in a manner that the Legislature intended for it to function. He stated that the state's economy is up and down and if the legislature were to terminate UTFC, he would not like to see the state have to recreate an entity that is now in place.

    Mr. Michael Loveless and Ms. Colleen Loveless, small business owners, explained that one of their most frustrating experiences with starting a small business was trying to obtain financing. They indicated that their company would not be in business today without the help of UTFC.

    Ms. Claire Geddes, United We Stand, stated that there are people who have benefitted from UTFC, but in looking at UTFC's overall record, she is concerned with its problems. She indicated that she is not sure that government was set up to be an investment banker and she urged the committee to look at this issue carefully. She distributed four newspaper articles concerning UTFC to committee members.

    Committee discussion and questions followed.

    Sen. Waddoups requested that a letter be drafted and sent, under the signatures of the chairs, to the Legislative Audit Subcommittee requesting a follow-up audit on UTFC, focusing on the following: 1) UTFC's implementation of and compliance with the recommendations outlined in the June 1998 audit; 2) an analysis of whether or not UTFC's functions could be handled within the Department of Community and Economic Development; and 3) a comparison UTFC's loss/loan ratio and default rate with other entities performing similar functions. He indicated that the follow-up audit will provide further information in anticipation of potential legislation for the 1999 General Session and therefore, the committee would need the audit completed and reported to the committee by the committee's November 1998 meeting. Rep. Knudson directed staff to draft the letter as requested.
                
5.    Utah Science Center Authority - Ms. Suzanne Winters-Ramsey, State Science Advisor, indicated that in 1993 the Legislature passed enabling legislation forming the Science Center Authority. In 1995, the Science Center Authority received an $150,000 appropriation to build exhibits for the "Leonardo on Wheels" program, a traveling science center. In 1996, the board resigned and Governor Leavitt appointed an interim board.

    Ms. Winters-Ramsey stated that the interim board is currently developing an interagency agreement with Utah State University. The university currently has a discovery center on campus similar to "Leonardo on Wheels" and plans to build a science center in Logan. The board hopes to be able to complete its interagency agreement by the end of the fiscal year and if the agreement goes through as planned, she will make a recommendation to the Legislature to sunset the Science Authority Center during the next session.
    
    Adjourn -

    MOTION: Rep. Bush moved to adjourn the meeting at 4:55 p.m. The motion passed unanimously.

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