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Second 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: Howard A. Stephenson

             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;
             20          .    clarifies application of government immunity; and
             21          .    makes technical corrections.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          This bill coordinates with H.B. 63, Recodification of Title 63 State Affairs in General,


             26      to address technical renumbering.
             27      Utah Code Sections Affected:
             28      ENACTS:
             29          63-55d-101, 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          63-55d-304, Utah Code Annotated 1953
             35      RENUMBERS AND AMENDS:
             36          63-55d-102, (Renumbered from 63-55a-1, as last amended by Laws of Utah 2003,
             37      Chapter 193)
             38          63-55d-201, (Renumbered from 63-55a-2, as last amended by Laws of Utah 2003,
             39      Chapter 193)
             40          63-55d-202, (Renumbered from 63-55a-3, as last amended by Laws of Utah 2003,
             41      Chapter 193)
             42     
             43      Be it enacted by the Legislature of the state of Utah:
             44          Section 1. Section 63-55d-101 is enacted to read:
             45     
CHAPTER 55d. PRIVATIZATION POLICY BOARD

             46     
Part 1. General Provisions

             47          63-55d-101. Title.
             48          This chapter is known as the "Privatization Policy Board Act."
             49          Section 2. Section 63-55d-102 , which is renumbered from Section 63-55a-1 is
             50      renumbered and amended to read:
             51           [63-55a-1].     63-55d-102. Definitions.
             52          (1) (a) "Activity" means to provide a good or service:
             53          (b) "Activity" includes to:
             54          (i) manufacture a good or service;
             55          (ii) process a good or service;
             56          (iii) sell a good or service;


             57          (iv) offer for sale a good or service;
             58          (v) rent a good or service;
             59          (vi) lease a good or service;
             60          (vii) deliver a good or service;
             61          (viii) distribute a good or service; or
             62          (ix) advertise a good or service.
             63          [(1) (a) "Agency" means a department, division, office, bureau, board, commission, or
             64      other administrative unit of the state.]
             65          [(b) "Agency" includes departments, divisions, offices, bureaus, boards, commissions,
             66      and other administrative units of the state's counties and municipalities.]
             67          (2) (a) Except as provided in Subsection (2)(b), "agency" means:
             68          (i) the state; or
             69          (ii) an entity of the state including a department, office, division, authority,
             70      commission, or board.
             71          (b) "Agency" does not include:
             72          (i) the Legislature;
             73          (ii) an entity or agency of the Legislature;
             74          (iii) the state auditor;
             75          (iv) the state treasurer;
             76          (v) the Office of the Attorney General;
             77          (vi) the Dairy Commission created in Title 4, Chapter 22, Dairy Promotion Act;
             78          (vii) the Heber Valley Railroad Authority created in Title 9, Chapter 3, Part 3, Heber
             79      Valley Historic Railroad Authority;
             80          (viii) the Utah Science Center Authority created in Title 9, Chapter 3, Part 4, Utah
             81      Science Center Authority;
             82          (ix) the Utah Housing Corporation created in Title 9, Chapter 4, Part 9, Utah Housing
             83      Corporation Act;
             84          (x) the Utah State Fair Corporation created in Title 9, Chapter 4, Part 11, Utah State
             85      Fair Corporation Act;
             86          (xi) the Workers' Compensation Fund created in Title 31A, Chapter 33, Workers'
             87      Compensation Fund;


             88          (xii) the Utah State Retirement Office created in Title 49, Chapter 11, Utah State
             89      Retirement Systems Administration;
             90          (xiii) the School and Institutional Trust Lands Administration created in Title 53C,
             91      Chapter 1, Part 2, School and Institutional Trust Lands Administration;
             92          (xiv) the Utah Communications Agency Network created in Title 63C, Chapter 7, Utah
             93      Communications Agency Network Act;
             94          (xv) the Utah Capital Investment Corporation created in Title 63, Chapter 38f, Part 12,
             95      Utah Venture Capital Enhancement Act;
             96          (xvi) an institution of higher education as defined in Section 53B-3-102 ;
             97          (xvii) a school established under Title 53A, Chapter 25, Schools for the Deaf and
             98      Blind; or
             99          (xviii) a charter school chartered by the State Charter School Board under Title 53A,
             100      Chapter 1a, Part 5, The Utah Charter Schools Act.
             101          [(2)] (3) "Agency head" means the chief administrative officer of an agency.
             102          [(3) "Privatization" means action by a state agency to contract with the private sector or
             103      with another state agency to perform functions or services currently being performed by it.]
             104          (4) "Board" means the Privatization Policy Board created in Section 63-55d-201 .
             105          (5) "Commercial activity" means to engage in an activity that can be obtained in whole
             106      or in part from a private enterprise.
             107          (6) "Local entity" means:
             108          (a) a political subdivision of the state, including a:
             109          (i) county;
             110          (ii) city;
             111          (iii) town;
             112          (iv) local school district;
             113          (v) local district; or
             114          (vi) special service district;
             115          (b) an agency of an entity described in this Subsection (6), including a department,
             116      office, division, authority, commission, or board; and
             117          (c) an entity created by an interlocal cooperative agreement under Title 11, Chapter 13,
             118      Interlocal Cooperation Act, between two or more entities described in this Subsection (6).


             119          (7) "Private enterprise" means a person that for profit:
             120          (a) manufactures a good or service;
             121          (b) processes a good or service;
             122          (c) sells a good or service;
             123          (d) offers for sale a good or service;
             124          (e) rents a good or service;
             125          (f) leases a good or service;
             126          (g) delivers a good or service;
             127          (h) distributes a good or service; or
             128          (i) advertises a good or service.
             129          (8) "Privatize" means that an activity engaged in by an agency is transferred so that a
             130      private enterprise engages in the activity including a transfer by:
             131          (a) contract;
             132          (b) transfer of property; or
             133          (c) another arrangement.
             134          Section 3. Section 63-55d-201 , which is renumbered from Section 63-55a-2 is
             135      renumbered and amended to read:
             136     
Part 2. Privatization Policy Board

             137           [63-55a-2].     63-55d-201. Privatization Policy Board -- Created -- Membership --
             138      Operations -- Expenses.
             139          (1) (a) There is created a Privatization Policy Board composed of 15 members.
             140          (b) The governor shall appoint board members as follows:
             141          (i) two senators, one each from the majority and minority political parties, from names
             142      recommended by the president of the Senate;
             143          (ii) two representatives, one each from the majority and minority political parties, from
             144      names recommended by the speaker of the House of Representatives;
             145          [(iii) two members]
             146          (iii) one member representing public employees, from names recommended by the
             147      largest public employees' association;
             148          (iv) one member from state management;
             149          (v) [five] seven members from the private business community;


             150          [(vi) one member representing education;]
             151          [(vii)] (vi) one member representing the Utah League of Cities and Towns from names
             152      recommended by the [league] Utah League of Cities and Towns; and
             153          [(viii)] (vii) one member representing the Utah Association of Counties from names
             154      recommended by the [association] Utah Association of Counties.
             155          (2) (a) Except as required by Subsection (2)(b), [board members] a board member:
             156          (i) appointed under Subsection (1)(b)(i) or (ii) shall serve a two-year term; and
             157          (ii) appointed under Subsections (1)(b)(iii) through (vii) shall serve a four-year [terms]
             158      term.
             159          (b) Notwithstanding the requirements of Subsection (2)(a), the governor shall, at the
             160      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             161      board members are staggered so that approximately half of the board is appointed every two
             162      years.
             163          (c) The governor shall on or before July 1, 2008 change the appointments to the board
             164      to reflect the membership requirements of Subsection (1)(b).
             165          (3) (a) [Each] A board member shall hold office until [his] the board member's
             166      successor [has been] is appointed and qualified.
             167          (b) When a vacancy occurs in the membership for any reason, [the] a replacement shall
             168      be appointed for the unexpired term.
             169          (c) Eight members of the board [are] constitute a quorum [for the purpose of
             170      organizing the board and conducting the business of the board].
             171          (d) The vote of a majority of board members voting when a quorum is present is
             172      necessary for the board to [take action] act.
             173          (4) (a) [At the initial meeting of the board, the] The board shall select one of [their
             174      number] the members to serve as chair of the board.
             175          (b) A chair shall serve as chair for a term of one-year, and may be selected as chair for
             176      more than one term.
             177          [(b)] (5) The chief procurement officer or [his designee is the nonvoting secretary to
             178      the board and is responsible for scheduling quarterly meetings] the chief procurement officer's
             179      designee shall staff the board.
             180          [(c)] (6) The board shall meet:


             181          (a) at least quarterly; and [at the call of]
             182          (b) as necessary to conduct its business, as called by the chair.
             183          (5) (a) (i) [Members who are not government employees shall receive no] A member
             184      who is not a government employee may not receive compensation or benefits for [their] the
             185      member's services, but may receive per diem and expenses incurred in the performance of the
             186      member's official duties at the rates established by the Division of Finance under Sections
             187      63A-3-106 and 63A-3-107 .
             188          (ii) [Members] A member who is not a government employee may decline to receive
             189      per diem and expenses for [their] the member's service.
             190          (b) (i) [State] A state government officer and employee [members] member who [do]
             191      does not receive salary, per diem, or expenses from [their] the member's agency for [their] the
             192      member's service may receive per diem and expenses incurred in the performance of [their] the
             193      member's official duties from the board at the rates established by the Division of Finance
             194      under Sections 63A-3-106 and 63A-3-107 .
             195          (ii) [State] A government officer and employee [members] member may decline to
             196      receive per diem and expenses for [their] the member's service.
             197          (c) (i) A local government member who does not receive salary, per diem, or expenses
             198      from the entity that the member represents for the member's service may receive per diem and
             199      expenses incurred in the performance of the member's official duties at the rates established by
             200      the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             201          (ii) A local government member may decline to receive per diem and expenses for the
             202      member's service.
             203          [(c)] (d) Legislators on the [committee] board shall receive compensation and expenses
             204      as provided by law and legislative rule.
             205          Section 4. Section 63-55d-202 , which is renumbered from Section 63-55a-3 is
             206      renumbered and amended to read:
             207           [63-55a-3].     63-55d-202. Privatization Policy Board -- Duties.
             208          (1) [Except as otherwise provided in Subsection (5), the] The board shall:
             209          (a) review whether or not [certain services performed by existing state agencies] a good
             210      or service provided by an agency could be privatized to provide the same types and quality of
             211      [services] a good or service that would result in cost savings;


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


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


             274          (i) compensation and benefits;
             275          (ii) a cost of training;
             276          (iii) a cost of paying overtime;
             277          (iv) a cost of supervising labor; or
             278          (v) another personnel expense;
             279          (b) an operating cost, such as:
             280          (i) vehicle maintenance and repair;
             281          (ii) a marketing, advertising, or other sales expense;
             282          (iii) an office expense;
             283          (iv) a cost of an accounting operation, such as billing;
             284          (v) an insurance expense;
             285          (vi) a real estate or equipment cost;
             286          (vii) a debt service cost; or
             287          (viii) a proportionate amount of other overhead or of a capital expense, such as vehicle
             288      depreciation and depreciation of other fixed assets;
             289          (c) a contract management cost; and
             290          (d) another cost particular to a person supplying the good or service; and
             291          (3) provides a process to estimate the taxes an agency would pay related to engaging in
             292      a commercial activity if the agency were required to pay federal, state, and local taxes to the
             293      same extent as a private enterprise engaging in the commercial activity.
             294          Section 6. Section 63-55d-301 is enacted to read:
             295     
Part 3. Commercial Activities Inventory and Review

             296          63-55d-301. Board to create inventory.
             297          (1) By no later than June 30, 2009, the board shall create an inventory of activities of
             298      the agencies in this state to classify whether each activity is:
             299          (a) a commercial activity; or
             300          (b) an inherently governmental activity.
             301          (2) The board shall update the inventory created under this section at least every two
             302      years.
             303          (3) The board shall make the inventory available to the public through electronic
             304      means.


             305          Section 7. Section 63-55d-302 is enacted to read:
             306          63-55d-302. Governor to require review of commercial activities.
             307          Beginning with fiscal year 2009-10, the governor shall at least once every two fiscal
             308      years:
             309          (1) select at least three commercial activities that are being performed by an agency for
             310      examination; and
             311          (2) require the Governor's Office of Planning and Budget to conduct the examination.
             312          Section 8. Section 63-55d-303 is enacted to read:
             313          63-55d-303. Duties of the Governor's Office of Planning and Budget.
             314          (1) The Governor's Office of Planning and Budget shall:
             315          (a) determine the amount of an appropriation that is no longer needed by an executive
             316      branch agency because all or a portion of the agency's provision of a good or service is
             317      privatized; and
             318          (b) adjust the governor's budget recommendations to reflect the amount determined
             319      under Subsection (1)(a).
             320          (2) The Governor's Office of Planning and Budget shall report its findings to the
             321      Legislature.
             322          (3) This section does not prevent the governor from recommending in a budget
             323      recommendation the restoration of a portion of the appropriation to an agency that is reduced
             324      under this section.
             325          Section 9. Section 63-55d-304 is enacted to read:
             326          63-55d-304. Government immunity.
             327          (1) This chapter or the inclusion of an activity on an inventory made under this chapter
             328      may not be construed as a waiver of any right, claim, or defense of immunity that an agency
             329      may have under Title 63, Chapter 30d, Governmental Immunity Act of Utah, or other law.
             330          (2) The inclusion in an inventory of an activity as a commercial activity for purposes of
             331      this chapter may not be construed to find that the activity does not constitute an exercise of a
             332      governmental function.
             333          Section 10. Coordinating H.B. 75 with H.B. 63 -- Technical numbering.
             334          If this H.B. 75 and H.B. 63, Recodification of Title 63 State Affairs in General, both
             335      pass it is the intent of the Legislature that the Office of Legislative Research and General


             336      Counsel in preparing the Utah Code database for publication:
             337          (1) treat the amendments in this bill as superseding the renumbering and amending in
             338      H.B. 63 to Sections 63-55a-1 , 63-55a-2 , and 63-55a-3 ;
             339          (2) not enact Section 63I-4-101 enacted in H.B. 63;
             340          (3) renumber Sections 63-55d-101 through 63-55d-102 in this bill as Sections
             341      63I-4-101 through 63I-4-102 ;
             342          (4) renumber Sections 63-55d-201 through 63-55d-203 in this bill as Sections
             343      63I-4-201 through 63I-4-203 ;
             344          (5) renumber Sections 63-55d-301 through 63-55d-304 in this bill as Sections
             345      63I-4-301 through 63I-4-304 ;
             346          (6) replace internal references in this bill to the sections listed in Subsections (3)
             347      through (5) with the appropriate corresponding renumbered sections; and
             348          (7) replace the citations to provisions renumbered by H.B. 63 other than Sections
             349      63-55a-1 , 63-55a-2 , and 63-55a-3 with the appropriate corresponding renumbered sections
             350      under H.B. 63.


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