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State Audit Shows Inconsistent Spending Of Community Projects Fund

Photo of oil pump. / DennyThurstonPhotography
The Community Impact Board funds projects that are intended to mitigate the impacts of oil and gas development on communities. State auditors recommend the board firm up its policies for allocating funds.

State lawmakers met Wednesday to review an audit on how Utah’s Community Impact Board, or CIB, has been using funds. 

The board oversees the Permanent Community Impact Fund, which comes from oil and gas revenue. That money is supposed to be used to minimize the effects of mineral extraction on public spaces, mostly in rural areas. It can be used on a variety of items, like creating parks, improving roads and increasing public safety services. 

But the audit shows the CIB approved a number of applications where the main benefit was to private industries.

House Minority Leader Brian King said that’s counterproductive to the purpose of the fund. 

“The audit seems to suggest that some of the activities that are funded, some of the projects that are funded, aggravate, rather than mitigate the impacts,” King said.

For example, in 2019 the CIB gave nearly $30 million to support a study for the Uinta Basin Rail Line, a project that will transport oil and other resources out of the state’s northeastern corner. 

The attorney general’s office raised concerns a year earlier, when the board first received the application, that the project wasn’t eligible for funding because its main purpose appeared to be economic development, which is against state and federal guidelines. 

However, auditors said there’s a lot of gray area in what does and doesn’t relieve industry impacts on communities, so they couldn’t determine whether the project was a proper appropriation of funds.

Community Impact Board Chair Jonathan Hardy contended that the applications the board has approved reduce “social, economic and public finance” consequences of natural resource development.

“To date, we believe every project we have funded fits these definitions,” Hardy said.

Senate President Stuart Adams suggested economic growth is an appropriate use. He said when industries are productive, communities receive more resources. 

“So there is some logic in prioritizing projects that would perpetuate or increase the probability of extracting minerals,” Adams said.

Additionally, the CIB is supposed to cap funding at $5 million per project. The audit found there were 54 times the board provided funding in amounts larger than that. 

At Wednesday’s meeting, auditors recommended the board implement and follow clearer and more specific policies for awarding funding.

Emily Means covers politics for KUER. Follow her on Twitter @Em_Means13

Emily Means is a government and politics reporter at KUER.
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