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SALT LAKE CITY — Tucked into Gov. Spencer Cox's $21.7 billion proposed budget released earlier this week is $33.1 million to finance the construction and operation of four new state liquor stores, breaking a precedent in which liquor stores were funded through lease revenue bonds.
The change will apply to two previously approved Salt Lake City liquor stores downtown and in the Foothill neighborhood, as well as recommended new stores in Sandy and Sugar House. The budget document explains the changes are intended to "maintain structural balance going forward."
"Aside from general obligation bonds and cash-funded projects, the state has traditionally issued lease-revenue bonds for capital development projects, such as state liquor stores," it says. Lease revenue bonds are loans paid back with, in this case, sales from the liquor stores.
"These liquor stores are often approved without all bond and operating costs funded up front by the Legislature," the budget goes on, recommending that, when future liquor stores are approved, "the Legislature also appropriate the respective debt service, operations and maintenance, and personnel funding costs on approval of the project. ... Given the amount of one-time revenue, the Governor recommends self-financing these buildings (a total of $33.1 million) and requiring the Department of Alcoholic Beverage Control to pay back the state with its alcohol sales revenues."
In other words, the money will still be repaid, but to the state instead of a lender. The state will then deposit that money "into a new State Facility Renovation and Development Fund to further support the state's space utilization and master planning efforts on an ongoing basis."
"Right now, we believe it makes a lot of sense to cash-fund the projects while the state has the ability to do so," said Miranda Jones, spokesperson for the Governor's Office of Management and Budget. "Really, with any infrastructure project, when there is the ability to pay cash on hand as opposed to get ourselves into a financial obligation where we have to pay the debt service for years down the road, the preference, almost always, is to cash-fund.
"The idea is the state itself would act as a lender, as opposed to the market acting as a lender," Jones said.
In August 2020, then-DABC director Sal Petilos told a legislative committee he expects the Sandy, Sugar House and Foothill stores to open in 2022, and the downtown store in 2023.