Waste Watch dives into some of the most egregious
, examples of government waste that politicians are leaving for future generations of American taxpayers to clean up.
The topic of the First Edition of Digital Liberty’s Waste Watch is the disastrous UTOPIA, or the Utah Telecommunication Open Infrastructure Agency.
This government-owned network (GON) has left Utah’s citizens with an economic burden of dystopian proportions. Predictably, the project has also fallen short of its projected service goals. This sad, socialistic story underscores the value of the free market and the false promise of GONs, as well as the importance holding the government accountable for treating our tax dollars like an infinite supply of coal to shovel into the engines of economically foolish projects.
UTOPIA was forged as “a consortium of 16 Utah cities that joined together in 2002 to provide a public fiber network.” Policymakers initially believed that $135 million in bonds and an aggregate pledge of $202 million over twenty years from eleven of the cities would be sufficient to fund the project. Additionally, “planners intended to build UTOPIA in three faces over a 3-4 year period.”
These projections for UTOPIA were wildly off. By 2007, Utopia was only providing full service to 3 of the 16 cities within the consortium and only offered service to 12% of the projected subscribers. As it progressed, UTOPIA grew increasingly mismanaged, leading the agency to place a hold on the broadband project until they secured an additional $66 million in loans from the Department of Agriculture’s Rural Utility Service, sinking more costs into this bottomless pit. Even though they did eventually provide an initial $21 million in funding in 2007, the RUS refused to release the rest of the loan until UTOPIA “improved its financial condition and developed a new business plan.” Requiring UTOPIA to become financially viable before attaining a new loan caused them to become insolvent. Eventually, ten of the cities backed yet another $185 million bond issue and extended their initial pledge from $202 million over twenty years to $495 million over 33 years in an attempt to save this sinking ship.
Unfortunately, it only took another two years for UTOPIA to become financially insolvent again. Thankfully for them, but regrettably for American taxpayers, this time it received federal stimulus money from President Obama’s American Recovery and Reinvestment Act of 2009, the stimulus package that fueled one of the slowest economic recoveries in American history. The stimulus package’s focus on bailing out futile ventures like UTOPIA may have been one of the reasons why so few Americans felt its benefits.
Since then, to the surprise of no one besides government bureaucrats, UTOPIA has not suddenly emerged as a success story. Instead, it continues to accumulate a Rocky Mountain’s worth of sunk costs. From 2010, the year that UTOPIA received federal bailout money, to 2022, UTOPIA’s total debt has increased from $192 million to $357 million – an 87% increase that is only growing. Despite this increase, UTOPIA had the audacity to tell taxpayers that the project has posed “no cost to taxpayers since 2009” when in fiscal year 2021, 11 Utah cities paid more than $15 million. This lie was so egregious that the Utah state auditor demanded that UTOPIA “discard or destroy…materials with misleading statements [and to] ensure future communications more accurately reflect the dependance on taxpayer support.” Rather than thank Utah’s citizens for bailing them out on multiple occasions, they decided to gaslight them and pretend that they had not underwritten the whole project from the start.
Despite flatly lying to the citizens of the cities that they serve and requiring multiple bailouts, UTOPIA does not receive sufficient scrutiny into their internal practices. They measure fraud risk through a self-reported test, instead of using an objective third-party auditor. Given their history of deception and bad financial judgment, this self-review policy seems likely to overlook other red flags in UTOPIA’s current practices.
UTOPIA is just one of the many examples of failed governmental projects. It is a case study into the reasons why policymakers should refrain from pursuing municipal broadband projects that require constant taxpayer checks to keep them afloat.