H.B. 370

1

SEVERANCE TAX REVISIONS
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: John G. Mathis
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill provides for disposition of certain revenues from severance taxes imposed on
10 oil and gas.
11 Highlighted Provisions:
12 This bill:
13 . provides that the lesser of 10% of the revenues collected from oil and gas severance
14 taxes or $10,000,000 shall be distributed to the county legislative bodies of oil and
15 gas producing counties;
16 . provides that the monies distributed to an oil and gas producing county be deposited
17 in the county's tax stability and trust fund;
18 . provides the circumstances under which an oil and gas producing county may
19 qualify to receive a distribution pursuant to this bill;
20 . provides direction to the State Tax Commission to distribute the monies under
21 certain circumstances;
22 . defines terms; and
23 . makes technical changes.
24 Monies Appropriated in this Bill:
25 None
26 Other Special Clauses:
27 None

28 Utah Code Sections Affected:
29 AMENDS:
30 17-36-51, as renumbered and amended by Chapter 133, Laws of Utah 2000
31 59-5-115, as last amended by Chapter 135, Laws of Utah 1996
32 ENACTS:
33 59-5-121, Utah Code Annotated 1953
34
35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 17-36-51 is amended to read:
37 17-36-51. Establishment of tax stability and trust fund -- Increase in tax levy.
38 (1) (a) Notwithstanding anything to the contrary contained in statute, the legislative
39 body of any county may by ordinance establish and maintain a tax stability and trust fund, for
40 the purpose of preserving funds during years with favorable tax revenues for use during years
41 with less favorable tax revenues.
42 (b) Each fund under Subsection (1)(a) shall be subject to all of the limitations and
43 restrictions imposed by this section and Sections 17-36-52 and 17-36-53 .
44 (c) The principal of the fund shall consist of:
45 (i) all sums transferred to [it] the fund in accordance with Subsection (2) [and];
46 (ii) interest or other income retained in the fund under Subsection 17-36-52 (2)[.]; and
47 (iii) all monies deposited in the fund in accordance with Section 59-5-121 .
48 (2) After establishing a tax stability and trust fund as provided in Subsection (1), the
49 legislative body, in establishing the levy for the property tax levied by the county under Section
50 59-2-908 , may establish the levy at a level not to exceed .0001 per dollar of taxable value of
51 taxable property increase per year that will permit the county to receive during that fiscal year
52 sums in excess of what may be required to provide for the purposes of the county. Any excess
53 sums so received are to be transferred from the General Fund of the county into the tax stability
54 and trust fund.
55 Section 2. Section 59-5-115 is amended to read:
56 59-5-115. Disposition of taxes collected -- Credit to General Fund.
57 [All] (1) Except as provided in Subsection (2), all taxes imposed and collected under
58 Section 59-5-102 shall be paid to the commission, and promptly remitted to the state

59 treasurer[,] and [except those taxes otherwise allocated under Section 59-5-116 or 59-5-119 ,]
60 credited to the General Fund.
61 (2) Taxes imposed and collected under Section 59-5-102 shall not be credited to the
62 General Fund if:
63 (a) those taxes are otherwise allocated under Section 59-5-116 or 59-5-119 ; or
64 (b) those taxes are otherwise allocated under Section 59-5-121 .
65 Section 3. Section 59-5-121 is enacted to read:
66 59-5-121. Distribution of oil and gas severance tax revenues to oil and gas
67 producing counties -- Expenditure of revenues.
68 (1) Subject to the other provisions of this section, for fiscal years beginning on or after
69 July 1, 2007, an oil and gas producing county shall receive a portion of an amount equal to the
70 lesser of the following:
71 (a) 10% of revenue collected from severance taxes during a fiscal year on oil and gas
72 imposed under Title 59, Chapter 5, Part 1, Oil and Gas Severance Tax, and not distributed in
73 accordance with Sections 59-5-116 and 59-5-119 ; or
74 (b) $10,000,000.
75 (2) Subject to Subsections (3), (4), and (5), the commission shall:
76 (a) on or before September 1, determine the amount a county may receive in
77 accordance with this section in the same average proportion that production volumes for oil
78 and gas within that county are reported to the division for the fiscal year for which the revenues
79 are collected bear to the total production volumes for oil and gas within the state that are
80 reported to the division for that same fiscal year;
81 (b) notify each county of the amount the county is qualified to received in accordance
82 with Subsection (2)(a); and
83 (c) distribute the revenues to the county legislative bodies of counties in which oil or
84 gas is produced in accordance with Subsections (3), (4), and (5).
85 (3) (a) Notwithstanding Subsection (2)(c), before a county legislative body receives a
86 distribution of revenues under this section, during the fiscal year for which the revenues
87 described in Subsection (1) are collected, the county legislative body shall deposit into the
88 county's tax stability and trust fund established under Section 17-36-51 an amount equal to or
89 greater than the amount of revenues the county legislative body is qualified to receive under

90 Subsection (2)(a).
91 (b) If during the fiscal year for which the revenues described in Subsection (1) are
92 collected a county legislative body deposits into its county tax stability and trust fund an
93 amount less than the amount of revenues the county legislative body is qualified to receive
94 under Subsection (2)(a), the commission shall distribute to the county legislative body, an
95 amount equal to the amount deposited by the county legislative body into its county tax
96 stability and trust fund during that fiscal year.
97 (4) The commission shall not distribute the revenues described in Subsection (2)(a) or
98 (3)(b) to a county legislative body if the county reaches or exceeds the total amount limit for its
99 county tax stability and trust fund as described in Section 17-36-53 .
100 (5) The commission shall distribute the revenues described in Subsection (2)(a) or
101 (3)(b) to the county legislative body within five business days after the following occur:
102 (a) the commission determines the amount the county is qualified to receive as
103 determined in Subsection (2)(a); and
104 (b) the county submits verification to the commission that it deposited the monies
105 described in Subsection (3) into the county's tax stability and trust fund.
106 (6) If the commission hasn't received verification from the county on or before August
107 1 of the year after the fiscal year for which the revenues are collected, the commission shall not
108 distribute the amount described in Subsection (2)(a) to the county.
109 (7) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
110 commission may by rule prescribe procedures for making the distributions required by this
111 section.
112 (8) A county legislative body that receives a distribution of revenues under this section
113 shall deposit the monies into the county's tax stability and trust fund established under Section
114 17-36-51 .




Legislative Review Note
as of 1-26-07 3:04 PM

Office of Legislative Research and General Counsel