First Substitute H.B. 370

Representative John G. Mathis proposes the following substitute bill:

1 SEVERANCE TAX REVISIONS
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: John G. Mathis
5 Senate Sponsor: Kevin T. Van Tassell
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 . creates the Oil and Gas Producing Counties Tax Stability Account;
14 . provides that the lesser of 10% of the revenues collected from oil and gas severance
15 taxes or $10,000,000 shall be deposited into the Oil and Gas Producing Counties
16 Tax Stability Account and distributed to the county legislative bodies of oil and gas
17 producing counties;
18 . provides that the monies distributed to an oil and gas producing county be deposited
19 in the county's tax stability and trust fund;
20 . provides the circumstances under which an oil and gas producing county may
21 qualify to receive a distribution pursuant to this bill;
22 . provides direction to the State Tax Commission to distribute the monies under
23 certain circumstances;
24 . defines terms; and
25 . makes technical changes.

26 Monies Appropriated in this Bill:
27 None
28 Other Special Clauses:
29 None
30 Utah Code Sections Affected:
31 AMENDS:
32 17-36-51, as renumbered and amended by Chapter 133, Laws of Utah 2000
33 59-5-115, as last amended by Chapter 135, Laws of Utah 1996
34 ENACTS:
35 63-97a-101, Utah Code Annotated 1953
36 63-97a-102, Utah Code Annotated 1953
37 63-97a-103, Utah Code Annotated 1953
38 63-97a-104, Utah Code Annotated 1953
39
40 Be it enacted by the Legislature of the state of Utah:
41 Section 1. Section 17-36-51 is amended to read:
42 17-36-51. Establishment of tax stability and trust fund -- Increase in tax levy.
43 (1) (a) Notwithstanding anything to the contrary contained in statute, the legislative
44 body of any county may by ordinance establish and maintain a tax stability and trust fund, for
45 the purpose of preserving funds during years with favorable tax revenues for use during years
46 with less favorable tax revenues.
47 (b) Each fund under Subsection (1)(a) shall be subject to all of the limitations and
48 restrictions imposed by this section and Sections 17-36-52 and 17-36-53 .
49 (c) The principal of the fund shall consist of:
50 (i) all sums transferred to [it] the fund in accordance with Subsection (2) [and];
51 (ii) interest or other income retained in the fund under Subsection 17-36-52 (2)[.]; and
52 (iii) all monies deposited in the fund in accordance with Section 63-97a-104 .
53 (2) After establishing a tax stability and trust fund as provided in Subsection (1), the
54 legislative body, in establishing the levy for the property tax levied by the county under Section
55 59-2-908 , may establish the levy at a level not to exceed .0001 per dollar of taxable value of
56 taxable property increase per year that will permit the county to receive during that fiscal year

57 sums in excess of what may be required to provide for the purposes of the county. Any excess
58 sums so received are to be transferred from the General Fund of the county into the tax stability
59 and trust fund.
60 Section 2. Section 59-5-115 is amended to read:
61 59-5-115. Disposition of taxes collected -- Credit to General Fund.
62 [All] (1) Except as provided in Subsection (2), all taxes imposed and collected under
63 Section 59-5-102 shall be paid to the commission, and promptly remitted to the state
64 treasurer[,] and [except those taxes otherwise allocated under Section 59-5-116 or 59-5-119 ,]
65 credited to the General Fund.
66 (2) Taxes imposed and collected under Section 59-5-102 shall not be credited to the
67 General Fund if:
68 (a) those taxes are otherwise allocated under Section 59-5-116 or 59-5-119 ; or
69 (b) those taxes are otherwise allocated under Section 63-97a-104 .
70 Section 3. Section 63-97a-101 is enacted to read:
71 CHAPTER 97a. OIL AND GAS PRODUCING COUNTIES TAX STABILITY
72 ACCOUNT ACT
73 63-97a-101. Title.
74 This chapter is known as the "Oil and Gas Producing Counties Tax Stability Account
75 Act."
76 Section 4. Section 63-97a-102 is enacted to read:
77 63-97a-102. Definitions.
78 As used in this chapter:
79 (1) "Account" means the Oil and Gas Producing Counties Tax Stability Account
80 created in Section 63-97a-103 .
81 (2) "Commission" means the State Tax Commission.
82 (3) "Division" means the Division of Finance.
83 Section 5. Section 63-97a-103 is enacted to read:
84 63-97a-103. Creation of Oil and Gas Producing Counties Tax Stability Account.
85 (1) There is created a restricted account within the General Fund known as the "Oil and
86 Gas Producing Counties Tax Stability Account."
87 (2) The account shall consist of:

88 (a) all monies credited to the account under Section 63-97a-104 ; and
89 (b) appropriations from the Legislature.
90 Section 6. Section 63-97a-104 is enacted to read:
91 63-97a-104. Distribution of certain oil and gas severance tax revenues from the
92 Oil and Gas Producing Counties Tax Stability Account.
93 (1) After making the distributions of oil and gas severance tax revenues as required
94 under Sections 59-5-116 and 59-5-119 , the commission shall make the distributions required
95 under Subsections (2) and (3).
96 (2) For fiscal years beginning on or after July 1, 2007, the commission shall deposit the
97 lesser of the following revenues into the Oil and Gas Producing Counties Tax Stability
98 Account:
99 (a) 10% of revenue collected from severance taxes during a fiscal year on oil and gas
100 imposed under Title 59, Chapter 5, Part 1, Oil and Gas Severance Tax, and not distributed in
101 accordance with Sections 59-5-116 and 59-5-119 ; or
102 (b) $10,000,000.
103 (3) Subject to Subsections (4), (5), and (6), the commission shall:
104 (a) on or before September 1, determine the amount a county may receive in
105 accordance with this section in the same average proportion that production volumes for oil
106 and gas within that county are reported to the Division of Oil, Gas, and Mining for the fiscal
107 year for which the revenues are collected bear to the total production volumes for oil and gas
108 within the state that are reported to the Division of Oil, Gas, and Mining for that same fiscal
109 year;
110 (b) on or before October 1 following the fiscal year for which the revenues described in
111 Subsection (1) are collected, notify each county of the amount the county is qualified to receive
112 in accordance with Subsection (3)(a); and
113 (c) subject to appropriation from the account, distribute the revenues to the county
114 legislative bodies of counties in which oil or gas is produced in accordance with Subsections
115 (4), (5), and (6).
116 (4) (a) Notwithstanding Subsection (3)(c), before a county legislative body receives a
117 distribution of revenues under this section, on or before January 31 following the fiscal year for
118 which the revenues described in Subsection (1) are collected, the county legislative body shall

119 deposit into the county's tax stability and trust fund established under Section 17-36-51 an
120 amount equal to or greater than the amount of revenues the county legislative body is qualified
121 to receive under Subsection (3)(a).
122 (b) If on or before January 31 following the fiscal year for which the revenues
123 described in Subsection (1) are collected a county legislative body deposits into its county tax
124 stability and trust fund an amount less than the amount of revenues the county legislative body
125 is qualified to receive under Subsection (3)(a), the commission shall distribute to the county
126 legislative body, an amount equal to the amount deposited by the county legislative body into
127 its county tax stability and trust fund by January 31.
128 (5) The commission shall not distribute the revenues described in Subsection (3)(a) or
129 (4)(b) to a county legislative body if the county reaches or exceeds the total amount limit for its
130 county tax stability and trust fund as described in Section 17-36-53 .
131 (6) The commission shall distribute the revenues described in Subsection (3)(a) or
132 (4)(b) to the county legislative body within 30 days after the following occur:
133 (a) the commission determines the amount the county is qualified to receive as
134 determined in Subsection (3)(a); and
135 (b) the county submits verification to the commission that it deposited the monies
136 described in Subsection (4) into the county's tax stability and trust fund.
137 (7) If the commission hasn't received verification from the county on or before January
138 31 following the fiscal year for which the revenues described in Subsection (1) are collected,
139 the commission shall not distribute the amount described in Subsection (3)(a) or (4)(b) to the
140 county.
141 (8) The division shall transfer any remaining funds in the account to the General Fund
142 on or before June 30 following the fiscal year for which the revenues described in Subsection
143 (1) are collected.
144 (9) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
145 commission may by rule prescribe procedures for making the distributions required by this
146 section.
147 (10) A county legislative body that receives a distribution of revenues under this
148 section shall deposit the monies into the county's tax stability and trust fund established under
149 Section 17-36-51 .