MINUTES OF THE
LEGISLATIVE AUDIT SUBCOMMITTEE
Tuesday, September 20, 2022 • 3:30 p.m. • 445 State Capitol


Members Present:
President J. Stuart Adams, Co-chair
Speaker Brad R. Wilson, Co-chair
Sen. Karen Mayne
Sen. Evan J. Vickers
Rep. Brian S. King
Rep. Mike Schultz

Staff Present:
Kade R. Minchey, Auditor General
Debbie Clawson, Administrative Assistant

Note: A copy of related materials and an audio recording of the meeting can be found at www.le.utah.gov.
1.Committee Business
MOTION:Speaker Wilson made a motion to approve the minutes of the August 16, 2022 Meeting. The motion passed with a vote of 4-0-2.
Yeas - 4Nays- 0Abs- 2
Sen. J. Adams
Rep. M. Schultz
Sen. E. Vickers
Rep. B. Wilson
Rep. B. King
Sen. K. Mayne
2.Audit Report Presentations
Mr. Benn Buys, Audit Manager, introduced A Performance Audit of Tax Increment Financing (Report #2022-10).
A Performance Audit of Tax Increment Financing (#2022-10)
Ms. Nicole Luscher, Audit Supervisor, reported the findings of the audit.
President Adams commented that we could be more robust in tracking tax increment financing and making sure that they accomplish the goals they were looking at.
Mr. Dan Hemmert, Executive Director, Governor's Office of Economic Opportunity, responded to the findings of the audit
Mr. Justin Lee, Director of Government Relations, Utah League of Cities and Towns, responded to the findings of the audit
Speaker Wilson voiced his concerns about a number of local government entities that are giving developers incentives and not tracking whether those developers delivered what they said they would.
Ms. Luscher responded to a question from Senator Vickers asking for clarification of reporting requirements found on page 24 of the report.
Mr. Buys further clarified by responding to Senator Vickers' question.
Ms. Luscher responded to a question from Representative Schultz about whether the audit was done around redevelopment areas or community development areas.
Mr. Hemmert also responded to the question from Representative Schultz.
Representative Schultz commented on the need for cities and local governments to reign in use of projects even more than last year and take a deeper dive into the projects they are approving.
Mr. Buys responded to Mr. Hemmert's earlier comments and referenced Recommendation #4 from Chapter 2 that recommends that Go Utah report those numbers of who is complying with the statutory requirement and who is not, and report that to the Legislature each year.
President Adams commented that we know there are needs, especially for redevelopment. He also emphasized that the big issue is reporting, and if we had that, that would help a ton.
MOTION:Speaker Wilson moved to refer A Performance Audit of Tax Increment Financing to the Political Subdivisions Subcommittee Interim Committee as the Lead Committee and the Economic Development and Workforce Services Interim Committee as the Review Committee.The motion passed with a vote of 5-0-1.
Yeas - 5Nays- 0Abs- 1
Sen. J. Adams
Sen. K. Mayne
Rep. M. Schultz
Sen. E. Vickers
Rep. B. Wilson
Rep. B. King
Mr. Brian Dean, Deputy Auditor General, introduced A Limited Review of the Utah Inland Port Authority (Report #2022-07).
A Limited Review of the Utah Inland Port Authority (#2022-07)
Mr. Zackery King, Lead Auditor presented the findings of the audit
Mr. King responded to a question from President Adams regarding a recommendation to not spend bond proceeds until there is proper oversight, and if they had looked at whether Inland Port had the ability to pay back the bond.
Mr. Brian Dean also responded to President Adams' question.
Mr. Dean responded to comments and a question from Speaker Wilson as to how they felt about the transition from the old world that wasn't working so great, to the new governance structure that is in place.
Speaker Wilson commented that there has been a change of trajectory in terms of the Port and where it is going, and that there is a lot of work to do to get our Inland Port working the way that it should be.
Representative Schultz thanked the auditors for their time and commitment to make this audit happen quickly, as time is of the essence, and the Board wants to make changes and get things going in the right direction as quickly as possible.
Senator Mayne appreciates the enthusiasm of the board and the enthusiasm of those involved, and also appreciates the auditors and those that have the skills to make this happen.
Mr. Miles Hansen, Board Chair, responded to the findings of the audit
Mr. Ben Hart, Executive Director, responded to the findings of the audit.
President Adams expressed appreciation for both the auditors and the response from the Inland Port, and also his confidence in what is going to happen there.
MOTION:Speaker Wilson moved to refer A Limited Review of the Utah Inland Port Authority to the Business, Economic Development, and Labor Appropriations Subcommittee as the Lead Committee and the Economic Development and Workforce Services Interim Committee as the Review Committee.
Discussion to the motion: Speaker Wilson asked if Mr. Hart and Mr. Hansen could come and give him an update on the implementation of all of these items so that he could hear firsthand where you are at in terms of getting things cleaned up and moving in the right direction.
Discussion to Motion: Representative Schultz thanked Mr. Hansen and Mr. Hart for their response to the audit and for the opportunity over the last several months to work with Mr. Hansen as the Chair. Miles Hansen has done a fantastic job and has been straight up and as forward and public as possible, and that is what the organization needs at this time. He has done a good job. Ben Hart has asked to meet with all of the stakeholders and he did that and got a lot of feedback from them. Representative thinks as this process starts to turn, it can now start to be productive for the State of Utah and its citizens.
MOTION:Speaker Wilson moved to refer A Limited Review of the Utah Inland Port Authority to the Business, Economic Development, and Labor Appropriations Subcommittee as the Lead Committee and the Economic Development and Workforce Services Interim Committee as the Review Committee.The motion passed with a vote of 6-0-0.
Yeas - 6Nays- 0Abs- 0
Sen. J. Adams
Rep. B. King
Sen. K. Mayne
Rep. M. Schultz
Sen. E. Vickers
Rep. B. Wilson
Mr. Miles Hansen thanked the members of the board, and he is excited to work with these incredible leaders as they move forward.
Mr. Darin Underwood, Deputy Auditor General, introduced An In-Depth Budget Review of the Utah Insurance Department (Report #2022-09).
An In-Depth Budget Review of the Utah Insurance Department (#2022-09)
Ms. Hillary Galvin, Lead Auditor, reported the findings of the audit.
Ms. Galvin responded to a question from President Adams regarding the captive insurance fund and whether any of them buy reinsurance where they are basically trying to self-insure?
Ms. Galvin responded to a question from Speaker Wilson about what the risk would be if a captive fails.
Mr. Underwood also responded to this question from Speaker Wilson.
Ms. Galvin had additional comments about treating all captives the same.
Mr. Johnathan T. Pike, Commissioner, Utah Insurance Department, responded to the findings of the audit
Reed Stringham, Deputy Commissioner, Tanji Northrup, Deputy Commissioner, and Patrick Lee, Director of Administrative Finance Division, were also present.
Mr. Reed Stringham responded to a question from Representative King about the potential harm or risk that exists with a captive insurance company that is not effectively regulated.
Mr. Stringham responded to a question from Representative King for help in understanding the potential for abuse if the captive is not regulated effectively.
Mr. Pike also responded to questions from Representative King.
Ms. Galvin referred to page 15 to give additional information and to clarify some of the questions posed by Representative King.
Representative King expressed that the department be vigilant to carry out their role as regulators effectively and that they do it without being compromised in terms of protecting the interests of those consumers who are there for the insurance department to protect.
MOTION:Speaker Wilson moved to refer an In-Depth Budget Review of the Utah Insurance Department to the Business, Economic Development, and Labor Appropriations Subcommittee as the Lead Committee and the Business and Labor Interim Committee as the Review Committee. The motion passed with a vote of 5-0-1.
Yeas - 5Nays- 0Abs- 1
Sen. J. Adams
Rep. B. King
Sen. K. Mayne
Sen. E. Vickers
Rep. B. Wilson
Rep. M. Schultz
3.Prioritization of Audits
MOTION:Speaker Wilson moved to prioritize an audit of housing in Utah. The audit should review the efficiency and effectiveness of federal, state, and local funding used for housing. Are state and local governments executing policies and practices that promote quality, efficient, and effective housing practices? The audit should also review any other issues or concerns with the development and execution of affordable housing in the state.The motion passed with a vote of 5-0-1.
Yeas - 5Nays- 0Abs- 1
Sen. J. Adams
Rep. B. King
Sen. K. Mayne
Sen. E. Vickers
Rep. B. Wilson
Rep. M. Schultz
President Adams expressed appreciation for the auditors in this state. He acknowledged three really great audits today and they have all been very productive, and that we have seen great outcomes that come from the audits.
MOTION:Speaker Wilson moved to adjourn the meeting.The motion passed with a vote of 5-0-1.
Yeas - 5Nays- 0Abs- 1
Sen. J. Adams
Rep. B. King
Sen. K. Mayne
Sen. E. Vickers
Rep. B. Wilson
Rep. M. Schultz