This is an exciting year in the world of state debt. You might be asking yourself, why would I be excited by debt? Well, because Utah’s debt is essentially gone, of course!
During the 2026 General Session, the Legislature set aside funds to effectively eliminate general obligation (G.O.) bond debt for state buildings. Hence, debt-free Utah. Let’s explore how Utah has achieved this milestone through debt paydown and the creation of a revolving loan fund.
Debt Set-Aside
The last building G.O. bond series remaining was the prison bonds, and setting aside money to pay them down is an important step in the State’s deliberate effort to reduce long-term debt obligations. In FY 2025, the state paid off over $400.0 million across all G.O. bonds, including $90.9 million to pay down the prison bonds from $150.4 million to $60.0 million.
During the 2026 General Session, the Legislature set aside the remaining $60.0 million (H.B. 2 item 173), to fully pay off the prison bond. The State is on track to pay off an additional $300.0 million across all G.O. bonds in FY 2026.
The Legislature set aside the $150.9 million in the Debt Service line item to pay off the prison bond debt in accordance with the State’s current debt service schedule. While this would not accelerate the payment schedule for these bonds, we consider these bonds paid off due to the State set-aside.
These payments mean the state will have reduced its G.O. bond liability to roughly $900 million. To put that in context, the historical highest amount of debt that Utah has had is roughly $3.7 billion. While substantial, it is important to consider the State’s overall financial position: Utah maintains traditional rainy-day fund balances around $1.2 billion, meaning, the State’s rainy-day fund balances could cover the remaining G.O. bond liability if needed.
Partnering Locally
In other debt news, the Legislature also passed H.B. 492 “Transportation, Infrastructure, and Housing Amendments” in the most recent General Session, which created the State Housing Infrastructure Partnership Fund and the State Housing Infrastructure Partnership Board. The Board oversees a revolving loan fund that loans money to local governments or other qualifying entities to build the infrastructure for new housing developments. This bill shifts state practice from directly subsidizing housing construction to helping local governments finance roads, water systems, sewer and drainage projects, and transportation infrastructure.
Both the recent debt paydown and revolving loan fund demonstrates a shift in state perspective on debt. The Legislature’s choice to practice fiscal responsibility, strict budget scrutiny, and wise tax stewardship lands the state in a strong fiscal position. These actions have also allowed the Legislature to help local governments finance the infrastructure necessary to support Utah’s growing housing development needs and encourage local governments to practice the same principles of responsible debt management.