H.B. 111 Enrolled

1

PERSONAL PROPERTY - CERTIFIED TAX
2 RATE AMENDMENTS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: John Dougall
6 Senate Sponsor: Wayne L. Niederhauser
7
8 LONG TITLE
9 General Description:
10 This bill amends the Minimum School Program Act and the Property Tax Act relating
11 to personal property and the calculation of the certified revenue levy and the certified
12 tax rate.
13 Highlighted Provisions:
14 This bill:
15 . defines terms;
16 . eliminates certain personal property from the calculation of the certified revenue
17 levy;
18 . eliminates certain personal property from the certified tax rate calculation;
19 . modifies the calculation of the certified tax rate; and
20 . makes technical changes.
21 Monies Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 This bill has retrospective operation to January 1, 2007.
25 Utah Code Sections Affected:
26 AMENDS:
27 53A-17a-103, as last amended by Chapter 354, Laws of Utah 2006
28 59-2-102, as last amended by Chapters 223 and 249, Laws of Utah 2006
29 59-2-913, as last amended by Chapter 105, Laws of Utah 2006

30 59-2-924, as last amended by Chapters 26, 105 and 359, Laws of Utah 2006
31
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 53A-17a-103 is amended to read:
34 53A-17a-103. Definitions.
35 As used in this chapter:
36 (1) "Basic state-supported school program" or "basic program" means public education
37 programs for kindergarten, elementary, and secondary school students that are operated and
38 maintained for the amount derived by multiplying the number of weighted pupil units for each
39 district by $2,417, except as otherwise provided in this chapter.
40 (2) (a) "Certified revenue levy" means a property tax levy that provides an amount of
41 ad valorem property tax revenue equal to the sum of:
42 [(a)] (i) the amount of ad valorem property tax revenue to be generated statewide in the
43 previous year from imposing a minimum basic tax rate, as specified in Subsection
44 53A-17a-135 (1)(a); and
45 [(b)] (ii) the product of:
46 [(i)] (A) new growth, as defined in Section 59-2-924 and rules of the State Tax
47 Commission; and
48 [(ii)] (B) the minimum basic tax rate certified by the State Tax Commission for the
49 previous year.
50 (b) For purposes of this Subsection (2), "ad valorem property tax revenue" does not
51 include property tax revenue received statewide from personal property that is:
52 (i) assessed by a county assessor in accordance with Title 59, Chapter 2, Part 3, County
53 Assessment; and
54 (ii) semiconductor manufacturing equipment.
55 (3) "Leeway program" or "leeway" means a state-supported voted leeway program or
56 board leeway program authorized under Section 53A-17a-133 or 53A-17a-134 .
57 (4) "Pupil in average daily membership (ADM)" means a full-day equivalent pupil.

58 (5) (a) "State-supported minimum school program" or "minimum school program"
59 means public school programs for kindergarten, elementary, and secondary schools as
60 described in this Subsection (5).
61 (b) The minimum school program established in the districts shall include the
62 equivalent of a school term of nine months as determined by the State Board of Education.
63 (c) (i) The board shall establish the number of days or equivalent instructional hours
64 that school is held for an academic school year.
65 (ii) Education, enhanced by utilization of technologically enriched delivery systems,
66 when approved by local school boards, shall receive full support by the State Board of
67 Education as it pertains to fulfilling the attendance requirements, excluding time spent viewing
68 commercial advertising.
69 (d) The program includes the total of the following annual costs:
70 (i) the cost of a basic state-supported school program; and
71 (ii) other amounts appropriated in this chapter in addition to the basic program.
72 (6) "Weighted pupil unit or units or WPU or WPUs" means the unit of measure of
73 factors that is computed in accordance with this chapter for the purpose of determining the
74 costs of a program on a uniform basis for each district.
75 Section 2. Section 59-2-102 is amended to read:
76 59-2-102. Definitions.
77 As used in this chapter and title:
78 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
79 engaging in dispensing activities directly affecting agriculture or horticulture with an
80 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
81 rotorcraft's use for agricultural and pest control purposes.
82 (2) "Air charter service" means an air carrier operation which requires the customer to
83 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
84 trip.
85 (3) "Air contract service" means an air carrier operation available only to customers

86 who engage the services of the carrier through a contractual agreement and excess capacity on
87 any trip and is not available to the public at large.
88 (4) "Aircraft" is as defined in Section 72-10-102 .
89 (5) "Airline" means any air carrier operating interstate routes on a scheduled basis
90 which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
91 routes.
92 (6) "Assessment roll" means a permanent record of the assessment of property as
93 assessed by the county assessor and the commission and may be maintained manually or as a
94 computerized file as a consolidated record or as multiple records by type, classification, or
95 categories.
96 (7) (a) "Certified revenue levy" means a property tax levy that provides the same
97 amount of ad valorem property tax revenue as was collected for the prior year, plus new
98 growth, but exclusive of revenue from collections from redemptions, interest, and penalties.
99 (b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
100 include property tax revenue received by a taxing entity from personal property that is:
101 (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
102 (ii) semiconductor manufacturing equipment.
103 (8) "County-assessed commercial vehicle" means:
104 (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
105 Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
106 property in furtherance of the owner's commercial enterprise;
107 (b) any passenger vehicle owned by a business and used by its employees for
108 transportation as a company car or vanpool vehicle; and
109 (c) vehicles which are:
110 (i) especially constructed for towing or wrecking, and which are not otherwise used to
111 transport goods, merchandise, or people for compensation;
112 (ii) used or licensed as taxicabs or limousines;
113 (iii) used as rental passenger cars, travel trailers, or motor homes;

114 (iv) used or licensed in this state for use as ambulances or hearses;
115 (v) especially designed and used for garbage and rubbish collection; or
116 (vi) used exclusively to transport students or their instructors to or from any private,
117 public, or religious school or school activities.
118 (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
119 "designated tax area" means a tax area created by the overlapping boundaries of only the
120 following taxing entities:
121 (i) a county; and
122 (ii) a school district.
123 (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
124 by the overlapping boundaries of:
125 (i) the taxing entities described in Subsection (9)(a); and
126 (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
127 and the boundaries of the city or town are identical; or
128 (B) a special service district if the boundaries of the school district under Subsection
129 (9)(a) are located entirely within the special service district.
130 (10) "Eligible judgment" means a final and unappealable judgment or order under
131 Section 59-2-1330 :
132 (a) that became a final and unappealable judgment or order no more than 14 months
133 prior to the day on which the notice required by Subsection 59-2-919 (4) is required to be
134 mailed; and
135 (b) for which a taxing entity's share of the final and unappealable judgment or order is
136 greater than or equal to the lesser of:
137 (i) $5,000; or
138 (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
139 previous fiscal year.
140 (11) (a) "Escaped property" means any property, whether personal, land, or any
141 improvements to the property, subject to taxation and is:

142 (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
143 to the wrong taxpayer by the assessing authority;
144 (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
145 comply with the reporting requirements of this chapter; or
146 (iii) undervalued because of errors made by the assessing authority based upon
147 incomplete or erroneous information furnished by the taxpayer.
148 (b) Property which is undervalued because of the use of a different valuation
149 methodology or because of a different application of the same valuation methodology is not
150 "escaped property."
151 (12) "Fair market value" means the amount at which property would change hands
152 between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
153 and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
154 market value" shall be determined using the current zoning laws applicable to the property in
155 question, except in cases where there is a reasonable probability of a change in the zoning laws
156 affecting that property in the tax year in question and the change would have an appreciable
157 influence upon the value.
158 (13) "Farm machinery and equipment," for purposes of the exemption provided under
159 Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
160 handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
161 tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
162 equipment used primarily for agricultural purposes; but does not include vehicles required to be
163 registered with the Motor Vehicle Division or vehicles or other equipment used for business
164 purposes other than farming.
165 (14) "Geothermal fluid" means water in any form at temperatures greater than 120
166 degrees centigrade naturally present in a geothermal system.
167 (15) "Geothermal resource" means:
168 (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
169 and

170 (b) the energy, in whatever form, including pressure, present in, resulting from, created
171 by, or which may be extracted from that natural heat, directly or through a material medium.
172 (16) (a) "Goodwill" means:
173 (i) acquired goodwill that is reported as goodwill on the books and records:
174 (A) of a taxpayer; and
175 (B) that are maintained for financial reporting purposes; or
176 (ii) the ability of a business to:
177 (A) generate income that exceeds a normal rate of return on assets; or
178 (B) obtain an economic or competitive advantage resulting from:
179 (I) superior management skills;
180 (II) reputation;
181 (III) customer relationships;
182 (IV) patronage; or
183 (V) a factor similar to Subsections (16)(a)(ii)(B)(I) through (IV).
184 (b) "Goodwill" does not include:
185 (i) the intangible property described in Subsection (19)(a) or (b);
186 (ii) locational attributes of real property, including:
187 (A) zoning;
188 (B) location;
189 (C) view;
190 (D) a geographic feature;
191 (E) an easement;
192 (F) a covenant;
193 (G) proximity to raw materials;
194 (H) the condition of surrounding property; or
195 (I) proximity to markets;
196 (iii) value attributable to the identification of an improvement to real property,
197 including:

198 (A) reputation of the designer, builder, or architect of the improvement;
199 (B) a name given to, or associated with, the improvement; or
200 (C) the historic significance of an improvement; or
201 (iv) the enhancement or assemblage value specifically attributable to the interrelation
202 of the existing tangible property in place working together as a unit.
203 (17) (a) For purposes of Section 59-2-103 :
204 (i) "household" means the association of persons who live in the same dwelling,
205 sharing its furnishings, facilities, accommodations, and expenses; and
206 (ii) "household" includes married individuals, who are not legally separated, that have
207 established domiciles at separate locations within the state.
208 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
209 commission may make rules defining the term "domicile."
210 (18) (a) Except as provided in Subsection (18)(c), "improvement" means a building,
211 structure, fixture, fence, or other item that is permanently attached to land, regardless of
212 whether the title has been acquired to the land, if:
213 (i) (A) attachment to land is essential to the operation or use of the item; and
214 (B) the manner of attachment to land suggests that the item will remain attached to the
215 land in the same place over the useful life of the item; or
216 (ii) removal of the item would:
217 (A) cause substantial damage to the item; or
218 (B) require substantial alteration or repair of a structure to which the item is attached.
219 (b) "Improvement" includes:
220 (i) an accessory to an item described in Subsection (18)(a) if the accessory is:
221 (A) essential to the operation of the item described in Subsection (18)(a); and
222 (B) installed solely to serve the operation of the item described in Subsection (18)(a);
223 and
224 (ii) an item described in Subsection (18)(a) that:
225 (A) is temporarily detached from the land for repairs; and

226 (B) remains located on the land.
227 (c) Notwithstanding Subsections (18)(a) and (b), "improvement" does not include:
228 (i) an item considered to be personal property pursuant to rules made in accordance
229 with Section 59-2-107 ;
230 (ii) a moveable item that is attached to land:
231 (A) for stability only; or
232 (B) for an obvious temporary purpose;
233 (iii) (A) manufacturing equipment and machinery; or
234 (B) essential accessories to manufacturing equipment and machinery;
235 (iv) an item attached to the land in a manner that facilitates removal without substantial
236 damage to:
237 (A) the land; or
238 (B) the item; or
239 (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
240 transportable factory-built housing unit is considered to be personal property under Section
241 59-2-1503 .
242 (19) "Intangible property" means:
243 (a) property that is capable of private ownership separate from tangible property,
244 including:
245 (i) moneys;
246 (ii) credits;
247 (iii) bonds;
248 (iv) stocks;
249 (v) representative property;
250 (vi) franchises;
251 (vii) licenses;
252 (viii) trade names;
253 (ix) copyrights; and

254 (x) patents;
255 (b) a low-income housing tax credit; or
256 (c) goodwill.
257 (20) "Low-income housing tax credit" means:
258 (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
259 or
260 (b) a low-income housing tax credit under:
261 (i) Section 59-7-607 ; or
262 (ii) Section 59-10-1010 .
263 (21) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
264 (22) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
265 valuable mineral.
266 (23) "Mining" means the process of producing, extracting, leaching, evaporating, or
267 otherwise removing a mineral from a mine.
268 (24) (a) "Mobile flight equipment" means tangible personal property that is:
269 (i) owned or operated by an:
270 (A) air charter service;
271 (B) air contract service; or
272 (C) airline; and
273 (ii) (A) capable of flight;
274 (B) attached to an aircraft that is capable of flight; or
275 (C) contained in an aircraft that is capable of flight if the tangible personal property is
276 intended to be used:
277 (I) during multiple flights;
278 (II) during a takeoff, flight, or landing; and
279 (III) as a service provided by an air charter service, air contract service, or airline.
280 (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
281 engine that is rotated:

282 (A) at regular intervals; and
283 (B) with an engine that is attached to the aircraft.
284 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
285 the commission may make rules defining the term "regular intervals."
286 (25) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
287 sand, rock, gravel, and all carboniferous materials.
288 (26) "Personal property" includes:
289 (a) every class of property as defined in Subsection (27) which is the subject of
290 ownership and not included within the meaning of the terms "real estate" and "improvements";
291 (b) gas and water mains and pipes laid in roads, streets, or alleys;
292 (c) bridges and ferries;
293 (d) livestock which, for the purposes of the exemption provided under Section
294 59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish; and
295 (e) outdoor advertising structures as defined in Section 72-7-502 .
296 (27) (a) "Property" means property that is subject to assessment and taxation according
297 to its value.
298 (b) "Property" does not include intangible property as defined in this section.
299 (28) "Public utility," for purposes of this chapter, means the operating property of a
300 railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
301 company, electrical corporation, telephone corporation, sewerage corporation, or heat
302 corporation where the company performs the service for, or delivers the commodity to, the
303 public generally or companies serving the public generally, or in the case of a gas corporation
304 or an electrical corporation, where the gas or electricity is sold or furnished to any member or
305 consumers within the state for domestic, commercial, or industrial use. Public utility also
306 means the operating property of any entity or person defined under Section 54-2-1 except water
307 corporations.
308 (29) "Real estate" or "real property" includes:
309 (a) the possession of, claim to, ownership of, or right to the possession of land;

310 (b) all mines, minerals, and quarries in and under the land, all timber belonging to
311 individuals or corporations growing or being on the lands of this state or the United States, and
312 all rights and privileges appertaining to these; and
313 (c) improvements.
314 (30) "Residential property," for the purposes of the reductions and adjustments under
315 this chapter, means any property used for residential purposes as a primary residence. It does
316 not include property used for transient residential use or condominiums used in rental pools.
317 (31) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number of
318 miles calculated by the commission that is:
319 (a) measured in a straight line by the commission; and
320 (b) equal to the distance between a geographical location that begins or ends:
321 (i) at a boundary of the state; and
322 (ii) where an aircraft:
323 (A) takes off; or
324 (B) lands.
325 (32) (a) "State-assessed commercial vehicle" means:
326 (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
327 to transport passengers, freight, merchandise, or other property for hire; or
328 (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
329 transports the vehicle owner's goods or property in furtherance of the owner's commercial
330 enterprise.
331 (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
332 are specified in Subsection (8)(c) as county-assessed commercial vehicles.
333 (33) "Taxable value" means fair market value less any applicable reduction allowed for
334 residential property under Section 59-2-103 .
335 (34) "Tax area" means a geographic area created by the overlapping boundaries of one
336 or more taxing entities.
337 (35) "Taxing entity" means any county, city, town, school district, special taxing

338 district, or any other political subdivision of the state with the authority to levy a tax on
339 property.
340 (36) "Tax roll" means a permanent record of the taxes charged on property, as extended
341 on the assessment roll and may be maintained on the same record or records as the assessment
342 roll or may be maintained on a separate record properly indexed to the assessment roll. It
343 includes tax books, tax lists, and other similar materials.
344 Section 3. Section 59-2-913 is amended to read:
345 59-2-913. Definitions -- Statement of amount and purpose of levy -- Contents of
346 statement -- Filing with county auditor -- Transmittal to commission -- Calculations for
347 establishing tax levies -- Format of statement.
348 (1) As used in this section[:], "budgeted property tax revenues" does not include
349 property tax revenue received by a taxing entity from personal property that is:
350 (a) assessed by a county assessor in accordance with Part 3, County Assessment; and
351 (b) semiconductor manufacturing equipment.
352 [(a) "percentage net change in the value of taxable property for the equalization
353 period" means the percentage net change between the taxable value of taxable property:]
354 [(i) (A) on June 8; and]
355 [(B) listed on the assessment roll as reported by the:]
356 [(I) county assessor; and]
357 [(II) county auditor; and]
358 [(ii) (A) on December 31; and]
359 [(B) as reported by the county auditor as a year-end taxable value; and]
360 [(b) "taxable property" means property:]
361 [(i) described in Section 59-2-201 that is assessed by the commission; and]
362 [(ii) described in Section 59-2-301 that is assessed by a county assessor.]
363 (2) (a) The legislative body of each taxing entity shall file a statement as provided in
364 this section with the county auditor of the county in which the taxing entity is located.
365 (b) The auditor shall annually transmit the statement to the commission:

366 (i) before June 22; or
367 (ii) with the approval of the commission, on a subsequent date prior to the date
368 established under Section 59-2-1317 for mailing tax notices.
369 (c) The statement shall contain the amount and purpose of each levy fixed by the
370 legislative body of the taxing entity.
371 (3) For purposes of establishing the levy set for each of a taxing entity's applicable
372 funds, the legislative body of the taxing entity shall calculate an amount determined by dividing
373 the budgeted property tax revenues, specified in a budget which has been adopted and
374 approved prior to setting the levy, by the amount calculated under Subsections
375 59-2-924 (2)(a)(iii)(B)(I) through (III).
376 (4) The format of the statement under this section shall:
377 (a) be determined by the commission; and
378 (b) cite any applicable statutory provisions that:
379 (i) require a specific levy; or
380 (ii) limit the property tax levy for any taxing entity.
381 (5) The commission may require certification that the information submitted on a
382 statement under this section is true and correct.
383 Section 4. Section 59-2-924 is amended to read:
384 59-2-924. Report of valuation of property to county auditor and commission --
385 Transmittal by auditor to governing bodies -- Certified tax rate -- Calculation of certified
386 tax rate -- Rulemaking authority -- Adoption of tentative budget.
387 (1) (a) Before June 1 of each year, the county assessor of each county shall deliver to
388 the county auditor and the commission the following statements: