UTOPIA: Why didn’t they tell us?
GUEST OPINION
September 16, 2012 12:26 am •
Imagine it's June of 2012, and you are the management of
UTOPIA, Utah's largest municipal telecom venture. You're reviewing the
final draft of an as yet unpublished but scathing report by the
Legislative Auditor General. Your second-largest member city -- Orem --
is proposing to raise property taxes by 50 percnet (later reduced to 25
percent), and they are explicitly blaming your organization.
You
are failing to meet your internal goal of 450 new subscribers each
month. In fact, you're not even getting halfway to that goal. (You are
actually getting only 190 subscribers per month with an aggressive
marketing effort.) Your operating expenses continue to exceed your
operating revenues. You can't pay your interest expenses without
borrowing more money. You are effectively paying your mortgage with a
credit card.
Lastly, you have less than six months of operating capital left.
What would you do?
Because
it's now September 2012, we don't have to imagine what UTOPIA's
management did, and didn't do. We know ... They didn't notify their
member cities of the impending cash crunch ... They didn't notify the
Legislative Auditor General of the impending cash crunch ... They did
not tell the taxpayers of the need to borrow more money just to operate.
Instead,
they hired Wilkinson Ferrari, a PR firm, to help them through the
audit's PR debacle. And then they waited until Tuesday, Aug. 28, to tell
Orem City that UTOPIA would be out of operating capital by September
30. UTOPIA consciously decided to wait until two weeks after the Truth
in Taxation hearing where hundreds of Orem residents filled city hall to
protest Orem's UTOPIA property tax hike before announcing that they'll
need to pony up more money, increase their debt and do it immediately!
The
city council agendas of Layton, Payson, Lindon, West Valley City and
Midvale (all UTOPIA cities) did not include a UTOPIA presentation in
August. My guess is that city council members in the other cities didn't
know about UTOPIA's impending cash crunch either.
UTOPIA's
solution? They want their member cities to authorize ten million dollars
in additional debt without even adopting a written public plan to get
them out of this mess. UTOPIA is soon to be out of money; it does not
earn enough to pay its day-to-day operating costs even if someone else
(the taxpayers) pays off all of the debt! UTOPIA's long-term solution
for its member cities? Borrow more money for operating costs because "we
can build out of our debt."
It's possible that UTOPIA's
management didn't deliberately wait. Under that scenario, UTOPIA's
management suddenly discovered after the public hearings that their
operating cash is all but gone. They tell us that we should be glad that
the money did not run out in June. As bad as it looks for them to have
waited, assuming that they waited is much better than assuming that they
just didn't know.
In either case, it's clear that the longer they
operate, the deeper they dig the financial hole. Taxpayers should not
have to backstop this financial failure any further ... nor should they
stomach UTOPIA's lack of transparency. Come on, at least tell us in a
timely manner what is going on. If you are not even going to tell your
member cities, then the time has come for the city councils of the
UTOPIA cities to reject UTOPIA's latest bailout scheme. Please ask your
city officials to not authorize an additional $10 million in debt just
to dig a deeper grave for UTOPIA.
• John Valentine
represents Orem, Lindon, Pleasant Grove, American Fork and Cedar Hills
in the Utah Senate. He is chairman of the legislature's Business and
Labor Committee. Senator John Valentine. Guest Opinion. Heraldextra.com
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