First Substitute H.B. 75

Representative Craig A. Frank proposes the following substitute bill:

1 INVENTORY AND REVIEW OF COMMERCIAL
2 ACTIVITIES
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Craig A. Frank
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies provisions related to the Privatization Policy Board.
11 Highlighted Provisions:
12 This bill:
13 . defines terms;
14 . addresses the membership of the board;
15 . addresses the duties of the board, including:
16 . creating an inventory of activities of state agencies; and
17 . conducting public hearings;
18 . requires the governor to review certain commercial activities;
19 . creates conforming processes; and
20 . makes technical corrections.
21 Monies Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 This bill coordinates with H.B. 63, Recodification of Title 63 State Affairs in General,
25 to address technical renumbering.

26 Utah Code Sections Affected:
27 ENACTS:
28 63-55d-101, Utah Code Annotated 1953
29 63-55d-103, Utah Code Annotated 1953
30 63-55d-203, Utah Code Annotated 1953
31 63-55d-301, Utah Code Annotated 1953
32 63-55d-302, Utah Code Annotated 1953
33 63-55d-303, Utah Code Annotated 1953
34 RENUMBERS AND AMENDS:
35 63-55d-102, (Renumbered from 63-55a-1, as last amended by Laws of Utah 2003,
36 Chapter 193)
37 63-55d-201, (Renumbered from 63-55a-2, as last amended by Laws of Utah 2003,
38 Chapter 193)
39 63-55d-202, (Renumbered from 63-55a-3, as last amended by Laws of Utah 2003,
40 Chapter 193)
41
42 Be it enacted by the Legislature of the state of Utah:
43 Section 1. Section 63-55d-101 is enacted to read:
44 CHAPTER 55d. PRIVATIZATION POLICY BOARD
45 Part 1. General Provisions
46 63-55d-101. Title.
47 This chapter is known as the "Privatization Policy Board Act."
48 Section 2. Section 63-55d-102 , which is renumbered from Section 63-55a-1 is
49 renumbered and amended to read:
50 [63-55a-1]. 63-55d-102. Definitions.
51 (1) (a) "Activity" means to provide a good or service:
52 (b) "Activity" includes to:
53 (i) manufacture a good or service;
54 (ii) process a good or service;
55 (iii) sell a good or service;
56 (iv) offer for sale a good or service;

57 (v) rent a good or service;
58 (vi) lease a good or service;
59 (vii) deliver a good or service;
60 (viii) distribute a good or service; or
61 (ix) advertise a good or service.
62 [(1) (a) "Agency" means a department, division, office, bureau, board, commission, or
63 other administrative unit of the state.]
64 [(b) "Agency" includes departments, divisions, offices, bureaus, boards, commissions,
65 and other administrative units of the state's counties and municipalities.]
66 (2) (a) Except as provided in Subsection (2)(b), "agency" means:
67 (i) the state;
68 (ii) an institution of higher education, as defined in Section 53B-3-102 ;
69 (iii) an entity of an agency described in this Subsection (2), including a department,
70 office, division, authority, commission, or board; and
71 (iv) an entity created by an interlocal cooperative agreement under Title 11, Chapter
72 13, Interlocal Cooperation Act, between two or more entities described in this Subsection (2) or
73 a local entity.
74 (b) "Agency" does not include:
75 (i) the Legislature;
76 (ii) an entity or agency of the Legislature;
77 (iii) the state auditor;
78 (iv) the state treasurer;
79 (v) the Office of the Attorney General;
80 (vi) the Dairy Commission created in Title 4, Chapter 22, Dairy Promotion Act;
81 (vii) the Heber Valley Railroad Authority created in Title 9, Chapter 3, Part 3, Heber
82 Valley Historic Railroad Authority;
83 (viii) the Utah Science Center Authority created in Title 9, Chapter 3, Part 4, Utah
84 Science Center Authority;
85 (ix) the Utah Housing Corporation created in Title 9, Chapter 4, Part 9, Utah Housing
86 Corporation Act;
87 (x) the Utah State Fair Corporation created in Title 9, Chapter 4, Part 11, Utah State

88 Fair Corporation Act;
89 (xi) the Workers' Compensation Fund created in Title 31A, Chapter 33, Workers'
90 Compensation Fund;
91 (xii) the Utah State Retirement Office created in Title 49, Chapter 11, Utah State
92 Retirement Systems Administration;
93 (xiii) the School and Institutional Trust Lands Administration created in Title 53C,
94 Chapter 1, Part 2, School and Institutional Trust Lands Administration;
95 (xiv) the Utah Communications Agency Network created in Title 63C, Chapter 7, Utah
96 Communications Agency Network Act; or
97 (xv) the Utah Capital Investment Corporation created in Title 63, Chapter 38f, Part 12,
98 Utah Venture Capital Enhancement Act.
99 [(2)] (3) "Agency head" means the chief administrative officer of an agency.
100 [(3) "Privatization" means action by a state agency to contract with the private sector or
101 with another state agency to perform functions or services currently being performed by it.]
102 (4) "Board" means the Privatization Policy Board created in Section 63-55d-201 .
103 (5) "Commercial activity" means to engage in an activity that can be obtained in whole
104 or in part from a private enterprise.
105 (6) "Local entity" means:
106 (a) a political subdivision of the state, including a:
107 (i) county;
108 (ii) city;
109 (iii) town;
110 (iv) local school district;
111 (v) local district; or
112 (vi) special service district;
113 (b) an agency of an entity described in this Subsection (6), including a department,
114 office, division, authority, commission, or board; and
115 (c) an entity created by an interlocal cooperative agreement under Title 11, Chapter 13,
116 Interlocal Cooperation Act, between two or more entities described in this Subsection (6).
117 (7) "Private enterprise" means a person that for profit:
118 (a) manufactures a good or service;

119 (b) processes a good or service;
120 (c) sells a good or service;
121 (d) offers for sale a good or service;
122 (e) rents a good or service;
123 (f) leases a good or service;
124 (g) delivers a good or service;
125 (h) distributes a good or service; or
126 (i) advertises a good or service.
127 (8) "Privatize" means that an activity engaged in by an agency is transferred so that a
128 private enterprise engages in the activity including a transfer by:
129 (a) contract;
130 (b) transfer of property; or
131 (c) another arrangement.
132 Section 3. Section 63-55d-103 is enacted to read:
133 63-55d-103. Exemptions.
134 This chapter does not apply to a transportation related project initiated pursuant to Title
135 72, Transportation Code.
136 Section 4. Section 63-55d-201 , which is renumbered from Section 63-55a-2 is
137 renumbered and amended to read:
138 Part 2. Privatization Policy Board
139 [63-55a-2]. 63-55d-201. Privatization Policy Board -- Created -- Membership --
140 Operations -- Expenses.
141 (1) (a) There is created a Privatization Policy Board composed of 15 members.
142 (b) The governor shall appoint board members as follows:
143 (i) two senators, one each from the majority and minority political parties, from names
144 recommended by the president of the Senate;
145 (ii) two representatives, one each from the majority and minority political parties, from
146 names recommended by the speaker of the House of Representatives;
147 [(iii) two members]
148 (iii) one member representing public employees, from names recommended by the
149 largest public employees' association;

150 (iv) one member from state management;
151 (v) [five] seven members from the private business community;
152 [(vi) one member representing education;]
153 [(vii)] (vi) one member representing the Utah League of Cities and Towns from names
154 recommended by the [league] Utah League of Cities or Towns; and
155 [(viii)] (vii) one member representing the Utah Association of Counties from names
156 recommended by the [association] Utah Association of Counties.
157 (2) (a) Except as required by Subsection (2)(b), [board members] a board member:
158 (i) appointed under Subsection (1)(b)(i) or (ii) shall serve a two-year term; and
159 (ii) appointed under Subsections (1)(b)(iii) through (vii) shall serve a four-year [terms]
160 term.
161 (b) Notwithstanding the requirements of Subsection (2)(a), the governor shall, at the
162 time of appointment or reappointment, adjust the length of terms to ensure that the terms of
163 board members are staggered so that approximately half of the board is appointed every two
164 years.
165 (c) The governor shall on or before July 1, 2008 change the appointments to the board
166 to reflect the membership requirements of Subsection (1)(b).
167 (3) (a) [Each] A board member shall hold office until [his] the board member's
168 successor [has been] is appointed and qualified.
169 (b) When a vacancy occurs in the membership for any reason, [the] a replacement shall
170 be appointed for the unexpired term.
171 (c) Eight members of the board [are] constitute a quorum [for the purpose of
172 organizing the board and conducting the business of the board].
173 (d) The vote of a majority of board members voting when a quorum is present is
174 necessary for the board to [take action] act.
175 (4) (a) [At the initial meeting of the board, the] The board shall select one of [their
176 number] the members to serve as chair of the board.
177 (b) A chair shall serve as chair for a term of one-year, and may be selected as chair for
178 more than one term.
179 [(b)] (5) The chief procurement officer or [his designee is the nonvoting secretary to
180 the board and is responsible for scheduling quarterly meetings] the chief procurement officer's

181 designee shall staff the board.
182 [(c)] (6) The board shall meet:
183 (a) at least quarterly; and [at the call of]
184 (b) as necessary to conduct its business, as called by the chair.
185 (5) (a) (i) [Members who are not government employees shall receive no] A member
186 who is not a government employee may not receive compensation or benefits for [their] the
187 member's services, but may receive per diem and expenses incurred in the performance of the
188 member's official duties at the rates established by the Division of Finance under Sections
189 63A-3-106 and 63A-3-107 .
190 (ii) [Members] A member who is not a government employee may decline to receive
191 per diem and expenses for [their] the member's service.
192 (b) (i) [State] A state government officer and employee [members] member who [do]
193 does not receive salary, per diem, or expenses from [their] the member's agency for [their] the
194 member's service may receive per diem and expenses incurred in the performance of [their] the
195 member's official duties from the board at the rates established by the Division of Finance
196 under Sections 63A-3-106 and 63A-3-107 .
197 (ii) [State] A government officer and employee [members] member may decline to
198 receive per diem and expenses for [their] the member's service.
199 (c) (i) A local government member who does not receive salary, per diem, or expenses
200 from the entity that the member represents for the member's service may receive per diem and
201 expenses incurred in the performance of the member's official duties at the rates established by
202 the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
203 (ii) A local government member may decline to receive per diem and expenses for the
204 member's service.
205 [(c)] (d) Legislators on the [committee] board shall receive compensation and expenses
206 as provided by law and legislative rule.
207 Section 5. Section 63-55d-202 , which is renumbered from Section 63-55a-3 is
208 renumbered and amended to read:
209 [63-55a-3]. 63-55d-202. Privatization Policy Board -- Duties.
210 (1) [Except as otherwise provided in Subsection (5), the] The board [shall]:
211 (a) may review whether or not [certain services performed by existing state agencies] a

212 good or service provided by an agency could be privatized to provide the same types and
213 quality of [services] good or service that would result in cost savings;
214 (b) shall review [particular requests for] privatization of [services and] a good or
215 service at the request of:
216 (i) an agency; or
217 (ii) a private enterprise;
218 (c) may review issues concerning agency competition with [the] one or more private
219 [sector and] enterprises to determine:
220 (i) whether privatization:
221 (A) would be feasible; and
222 (B) would result in cost savings; and
223 (ii) ways to eliminate any unfair competition with a private enterprise;
224 [(c)] (d) shall recommend privatization to [the] an agency [head when the] if a
225 proposed privatization is demonstrated to provide a more cost efficient and effective manner of
226 providing [existing governmental services] a good or service;
227 [(d)] (e) shall comply with [the provisions of] Title 63, Chapter 46a, [the] Utah
228 Administrative Rulemaking Act, in making rules establishing privatization standards,
229 procedures, and requirements;
230 [(e)] (f) shall maintain communication with and access information from, other entities
231 promoting privatization;
232 (g) shall comply with Part 3, Commercial Activities Inventory and Review;
233 (h) shall:
234 [(f)] (i) prepare an annual report for each calendar year that contains:
235 [(i)] (A) information about the board's activities; [and]
236 [(ii)] (B) recommendations on privatizing [government services] a good or service
237 provided by an agency; and
238 (C) the status of the inventory created under Part 3, Commercial Activities Inventory
239 and Review;
240 [(g)] (ii) submit the annual report to the Legislature and the governor[.] by no later than
241 January 15 immediately following the calendar year for which the report is made; and
242 (iii) provide each interim an oral report to the Government Operations Interim

243 Committee.
244 (2) In addition to filing [copies] a copy of [its] recommendations for privatization with
245 [the relevant] an agency head, the board shall file [copies] a copy of its recommendations for
246 privatization with:
247 (a) the governor's office; and
248 (b) the Office of Legislative Fiscal Analyst for submission to the relevant legislative
249 appropriation subcommittee.
250 (3) (a) The board may appoint advisory groups to conduct studies, research, or
251 analyses, and make reports and recommendations with respect to [subjects or matters] a matter
252 within the jurisdiction of the board.
253 (b) At least one member of the board shall serve on each advisory group.
254 (4) [This] (a) Subject to Subsection (4)(b), this chapter does not preclude [any] an
255 agency from privatizing [any] the provision of a good or service [or function independently]
256 independent of the board [if,].
257 (b) If an agency privatizes the provision of a good or service, the agency shall include
258 as part of the contract that privatizes the [function, the] provision of the good or service that
259 any contractor assumes all liability to [perform the privatizated function] provide the good or
260 service.
261 (5) The board may [not exercise its authority under Subsection (1) over an agency
262 referred to in Subsection 63-55a-1 (b), unless requested by the agency.] at the request of a local
263 entity review a matter relevant to:
264 (a) privatization; or
265 (b) unfair competition with one or more private enterprises.
266 Section 6. Section 63-55d-203 is enacted to read:
267 63-55d-203. Board accounting method.
268 The board by rule made in accordance with Title 63, Chapter 46a, Utah Administrative
269 Rulemaking Act, shall establish an accounting method that:
270 (1) is similar to generally accepted accounting principles used by a private enterprise;
271 (2) allows an agency to identify the total actual cost of engaging in a commercial
272 activity in a manner similar to how a private enterprise identifies the total actual cost to the
273 private enterprise, including the following:

274 (a) a labor expense, such as:
275 (i) compensation and benefits;
276 (ii) a cost of training;
277 (iii) a cost of paying overtime;
278 (iv) a cost of supervising labor; or
279 (v) another personnel expense;
280 (b) an operating cost, such as:
281 (i) vehicle maintenance and repair;
282 (ii) a marketing, advertising, or other sales expense;
283 (iii) an office expense;
284 (iv) a cost of an accounting operation, such as billing;
285 (v) an insurance expense;
286 (vi) a real estate or equipment cost;
287 (vii) a debt service cost; or
288 (viii) a proportionate amount of other overhead or of a capital expense, such as vehicle
289 depreciation and depreciation of other fixed assets;
290 (c) a contract management cost; and
291 (d) another cost particular to a person supplying the good or service; and
292 (3) provides a process to estimate the taxes an agency would pay related to engaging in
293 a commercial activity if the agency were required to pay federal, state, and local taxes to the
294 same extent as a private enterprise engaging in the commercial activity.
295 Section 7. Section 63-55d-301 is enacted to read:
296 Part 3. Commercial Activities Inventory and Review
297 63-55d-301. Board to create inventory.
298 (1) By no later than June 30, 2009, the board shall create an inventory of activities of
299 the agencies in this state to classify whether each activity is:
300 (a) a commercial activity; or
301 (b) an inherently governmental activity.
302 (2) The board shall update the inventory created under this section at least every two
303 years.
304 (3) The board shall make the inventory available to the public through electronic

305 means.
306 Section 8. Section 63-55d-302 is enacted to read:
307 63-55d-302. Governor to require review of commercial activities.
308 Beginning with fiscal year 2009-2010, the governor shall at least once every two fiscal
309 years:
310 (1) select at least three commercial activities that are being performed by an agency for
311 examination; and
312 (2) require the Governor's Office of Planning and Budget to conduct the examination;
313 Section 9. Section 63-55d-303 is enacted to read:
314 63-55d-303. Duties of the Governor's Office of Planning and Budget.
315 (1) The Governor's Office of Planning and Budget shall:
316 (a) determine the amount of an appropriation that is no longer needed by an executive
317 branch agency because all or a portion of the agency's provision of a good or service is
318 privatized; and
319 (b) adjust the governor's budget recommendations to reflect the amount determined
320 under Subsection (1)(a).
321 (2) The Governor's Office of Planning and Budget shall report its finding to the
322 Legislature.
323 (3) This section does not prevent the governor from recommending in a budget
324 recommendation the restoration of a portion of the appropriation to an agency that is reduced
325 under this section.
326 Section 10. Coordinating H.B. 75 with H.B. 63 -- Technical numbering.
327 If this H.B. 75 and H.B. 63, Recodification of Title 63 State Affairs in General, both
328 pass it is the intent of the Legislature that the Office of Legislative Research and General
329 Counsel in preparing the Utah Code database for publication:
330 (1) treat the amendments in this bill as superseding the renumbering and amending in
331 H.B. 63 to Sections 63-55a-1 , 61-55a-2 , and 61-55a-3 ;
332 (2) not enact Section 63I-4-101 enacted in H.B. 63;
333 (3) renumber Sections 63-55d-101 through 63-55d-103 in this bill as Sections
334 63I-4-101 through 63I-4-103 ;
335 (4) renumber Sections 63-55d-201 through 63-55d-203 in this bill as Sections

336 63I-4-201 through 63I-4-203 ;
337 (5) renumber Sections 63-55d-301 through 63-55d-303 in this bill as Sections
338 63I-4-301 through 63I-4-303 ;
339 (6) replace internal references in this bill to the sections listed in Subsections (3)
340 through (5) with the appropriate corresponding renumbered sections; and
341 (7) replace the citations to provisions renumbered by H.B. 63 other than Sections
342 63-55a-1 , 61-55a-2 , and 61-55a-3 with the appropriate corresponding renumbered sections
343 under H.B. 63.