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.