Plan to aid high-tech firms is in slow lane in Utah

State officials are looking for ways to boost the amount of capital available for high-tech companies, but
one possible avenue may not be ready anytime soon.

By Brice Wallace
Deseret News business writer

A proposal to establish a contingent tax credit might be ready in time for the 2002 general legislative
session, but the issue’s complexity makes it more likely that any implementation would occur after that,
legislative attorney James Wilson said Wednesday to the Workforce Services and Community and Economic
Development Interim Committee.

Attorneys will try to craft a bill anyway. Committee co-chair Richard Siddoway, R-Bountiful, said he’s "a
little nervous" about the issue’s complexity, especially coming such a short time before the general session
and during an election season.
"But I think we need to have something we can look at," he said.
People from several legislative committees and task forces have identified questions that need to be
answered, such as the details of an investment board, a state entity, plus a private nonprofit capital
investment corporation.

But supporters envision a "fund of funds" that would attract a broad range of institutional investors to
provide seed money and early-stage capital for existing firms. They have said companies can obtain debt
financing from banks once they reach certain growth levels, but money for startups is lacking.
The state would not guarantee any individual’s or group’s debt. Instead, it would serve as a creditor rather
than a potential secondary debtor.

Oklahoma has had a contingent tax credit in place for 14 years, with positive returns and without taxpayer
cost. But speakers Wednesday said Iowa may be a better model — although its system is not yet operational
— because that state worked out constitutional issues with its attorney general before passing the necessary
legislation.

Interim committee members suggested that Utah’s attorney general have input on any Utah draft bill.
"Right now I think there’s real confusion," said Jerry Oldroyd, an attorney who was part of the legislative
work group looking into the issue. "We like the concept, but as (House) Speaker (Marty) Stephens said to
me, ‘The devil’s in the details, and don’t ask for my support until I see the bill.’ "
Oldroyd said the contingent tax credit program would not require legislative appropriations and possibly
could be handled by the Board of Business and Economic Development with help from the state treasurer.

Several legislators said they want to see a draft bill. Rep. Peggy Wallace, R-West Jordan, said her high-tech
constituents want to know more about the concept. "They’re very interested in anything that would bring
money into the state," Wallace said.
Rep. Cindy Beshear, D-Taylorsville, agreed. "If we’re going to be competitive in the 21st century and the
new global economy, we’re going to have to change our way of doing business," she said.

"The seed has to be planted and nourished," said Rep. Carl Saunders, R-Weber, "to come to fruition."

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