Second Substitute H.B. 355

Representative Wayne A. Harper proposes the following substitute bill:

1 TAX CHANGES AND APPROPRIATIONS FOR
2 PREVENTIVE HEALTH ACTIVITIES
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Paul Ray
6 Senate Sponsor: ____________
7 Cosponsors:
8 Rebecca Chavez-Houck
9 Lynn N. Hemingway
10 Neal B. HendricksonBradley G. Last
Steven R. Mascaro
Karen W. Morgan
Carol Spackman MossJennifer M. Seelig
Stephen H. Urquhart
R. Curt Webb 11
12 LONG TITLE
13 General Description:
14 This bill amends the Sales and Use Tax Act and the Cigarette and Tobacco Tax and
15 Licensing Act.
16 Highlighted Provisions:
17 This bill:
18 . reduces the state sales and use tax rate from 4.65% to 4.59%;
19 . increases the cigarette tax by an amount equivalent to 50 cents per pack of 20
20 cigarettes (from 69.5 cents to $1.19½ per pack for cigarettes weighing not more
21 than three pounds per thousand, and from 81.5 cents to $1.31½ per pack for
22 cigarettes weighing more than three pounds per thousand);
23 . specifies that the lesser of $3,100,000 or the total amount of the tax increase shall
24 be deposited annually in the Cigarette Tax Restricted Account and, as funds are
25 available, appropriated to the Department of Health for cancer screening and the
26 Gold Medal Schools Program;

27 . updates the formula for appropriating revenue remaining in the Cigarette Tax
28 Restricted Account at the end of the fiscal year; and
29 . makes conforming and technical changes.
30 Monies Appropriated in this Bill:
31 None
32 Other Special Clauses:
33 This bill takes effect on July 1, 2008.
34 Utah Code Sections Affected:
35 AMENDS:
36 59-12-103, as last amended by Laws of Utah 2007, Chapters 9, 101, 126, 206, and 288
37 59-12-902, as last amended by Laws of Utah 2004, Chapter 18
38 59-14-204, as last amended by Laws of Utah 2007, Chapter 6
39
40 Be it enacted by the Legislature of the state of Utah:
41 Section 1. Section 59-12-103 is amended to read:
42 59-12-103. Sales and use tax base -- Rates -- Effective dates -- Use of sales and use
43 tax revenues.
44 (1) A tax is imposed on the purchaser as provided in this part for amounts paid or
45 charged for the following transactions:
46 (a) retail sales of tangible personal property made within the state;
47 (b) amounts paid:
48 (i) to a:
49 (A) telephone service provider regardless of whether the telephone service provider is
50 municipally or privately owned; or
51 (B) telegraph corporation:
52 (I) as defined in Section 54-2-1 ; and
53 (II) regardless of whether the telegraph corporation is municipally or privately owned;
54 and
55 (ii) for:
56 (A) telephone service, other than mobile telecommunications service, that originates
57 and terminates within the boundaries of this state;

58 (B) mobile telecommunications service that originates and terminates within the
59 boundaries of one state only to the extent permitted by the Mobile Telecommunications
60 Sourcing Act, 4 U.S.C. Sec. 116 et seq.; or
61 (C) telegraph service;
62 (c) sales of the following for commercial use:
63 (i) gas;
64 (ii) electricity;
65 (iii) heat;
66 (iv) coal;
67 (v) fuel oil; or
68 (vi) other fuels;
69 (d) sales of the following for residential use:
70 (i) gas;
71 (ii) electricity;
72 (iii) heat;
73 (iv) coal;
74 (v) fuel oil; or
75 (vi) other fuels;
76 (e) sales of prepared food;
77 (f) except as provided in Section 59-12-104 , amounts paid or charged as admission or
78 user fees for theaters, movies, operas, museums, planetariums, shows of any type or nature,
79 exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses, menageries,
80 fairs, races, contests, sporting events, dances, boxing matches, wrestling matches, closed circuit
81 television broadcasts, billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf
82 driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails,
83 tennis courts, swimming pools, water slides, river runs, jeep tours, boat tours, scenic cruises,
84 horseback rides, sports activities, or any other amusement, entertainment, recreation,
85 exhibition, cultural, or athletic activity;
86 (g) amounts paid or charged for services for repairs or renovations of tangible personal
87 property, unless Section 59-12-104 provides for an exemption from sales and use tax for:
88 (i) the tangible personal property; and

89 (ii) parts used in the repairs or renovations of the tangible personal property described
90 in Subsection (1)(g)(i), whether or not any parts are actually used in the repairs or renovations
91 of that tangible personal property;
92 (h) except as provided in Subsection 59-12-104 (7), amounts paid or charged for
93 assisted cleaning or washing of tangible personal property;
94 (i) amounts paid or charged for tourist home, hotel, motel, or trailer court
95 accommodations and services that are regularly rented for less than 30 consecutive days;
96 (j) amounts paid or charged for laundry or dry cleaning services;
97 (k) amounts paid or charged for leases or rentals of tangible personal property if within
98 this state the tangible personal property is:
99 (i) stored;
100 (ii) used; or
101 (iii) otherwise consumed;
102 (l) amounts paid or charged for tangible personal property if within this state the
103 tangible personal property is:
104 (i) stored;
105 (ii) used; or
106 (iii) consumed; and
107 (m) amounts paid or charged for prepaid telephone calling cards.
108 (2) (a) Except as provided in Subsections (2)(b) through (e), a state tax and a local tax
109 is imposed on a transaction described in Subsection (1) equal to the sum of:
110 (i) a state tax imposed on the transaction at a tax rate of [4.65%] 4.59%; and
111 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
112 transaction under this chapter other than this part.
113 (b) Except as provided in Subsection (2)(d) or (e), a state tax and a local tax is imposed
114 on a transaction described in Subsection (1)(d) equal to the sum of:
115 (i) a state tax imposed on the transaction at a tax rate of 2%; and
116 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
117 transaction under this chapter other than this part.
118 (c) Except as provided in Subsection (2)(d) or (e), beginning on January 1, 2007, a
119 state tax and a local tax is imposed on amounts paid or charged for food and food ingredients

120 equal to the sum of:
121 (i) a state tax imposed on the amounts paid or charged for food and food ingredients at
122 a tax rate of 1.75%; and
123 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
124 amounts paid or charged for food and food ingredients under this chapter other than this part.
125 (d) Except as provided in Subsection (2)(e), if a seller collects a tax in accordance with
126 Subsection 59-12-107 (1)(b) on a transaction described in Subsection (1), a state tax and a local
127 tax is imposed on the transaction equal to the sum of:
128 (i) a state tax imposed on the transaction at a tax rate of:
129 (A) [4.65%] 4.59% for a transaction other than a transaction described in Subsection
130 (2)(d)(i)(B) or (2)(d)(i)(C);
131 (B) 2% for a transaction described in Subsection (1)(d); or
132 (C) beginning on January 1, 2007, 1.75% on the amounts paid or charged for food and
133 food ingredients; and
134 (ii) a local tax imposed on the transaction at a tax rate equal to the sum of the following
135 tax rates:
136 (A) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,
137 and towns in the state impose the tax authorized by Section 59-12-204 ; and
138 (B) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
139 state impose the tax authorized by Section 59-12-1102 .
140 (e) (i) A state tax and a local tax is imposed on an entire bundled transaction as
141 provided in this Subsection (2)(e) if the bundled transaction is attributable to food and food
142 ingredients and tangible personal property other than food and food ingredients.
143 (ii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by a
144 seller other than a seller that collects a tax in accordance with Subsection 59-12-107 (1)(b),
145 beginning on January 1, 2007, a state tax and a local tax is imposed on the entire bundled
146 transaction equal to the sum of:
147 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
148 Subsection (2)(a)(i); and
149 (B) a local tax imposed on the entire bundled transaction at the sum of the tax rates
150 described in Subsection (2)(a)(ii).

151 (iii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by
152 a seller in accordance with Subsection 59-12-107 (1)(b), beginning on January 1, 2007, a state
153 tax and a local tax is imposed on the entire bundled transaction equal to the sum of:
154 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
155 Subsection (2)(d)(i)(A); and
156 (B) a local tax imposed on the entire bundled transaction at a tax rate equal to the sum
157 of the following tax rates:
158 (I) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,
159 and towns in the state impose the tax authorized by Section 59-12-204 ; and
160 (II) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
161 state impose the tax authorized by Section 59-12-1102 .
162 (f) Subject to Subsections (2)(g) and (h), a tax rate repeal or tax rate change for a tax
163 rate imposed under the following shall take effect on the first day of a calendar quarter:
164 (i) Subsection (2)(a)(i);
165 (ii) Subsection (2)(b)(i);
166 (iii) Subsection (2)(c)(i);
167 (iv) Subsection (2)(d)(i);
168 (v) Subsection (2)(e)(ii)(A); or
169 (vi) Subsection (2)(e)(iii)(A).
170 (g) (i) For a transaction described in Subsection (2)(g)(iii), a tax rate increase shall take
171 effect on the first day of the first billing period that begins after the effective date of the tax rate
172 increase if the billing period for the transaction begins before the effective date of a tax rate
173 increase imposed under:
174 (A) Subsection (2)(a)(i);
175 (B) Subsection (2)(b)(i);
176 (C) Subsection (2)(c)(i);
177 (D) Subsection (2)(d)(i);
178 (E) Subsection (2)(e)(ii)(A); or
179 (F) Subsection (2)(e)(iii)(A).
180 (ii) For a transaction described in Subsection (2)(g)(iii), the repeal of a tax or a tax rate
181 decrease shall take effect on the first day of the last billing period that began before the

182 effective date of the repeal of the tax or the tax rate decrease if the billing period for the
183 transaction begins before the effective date of the repeal of the tax or the tax rate decrease
184 imposed under:
185 (A) Subsection (2)(a)(i);
186 (B) Subsection (2)(b)(i);
187 (C) Subsection (2)(c)(i);
188 (D) Subsection (2)(d)(i);
189 (E) Subsection (2)(e)(ii)(A); or
190 (F) Subsection (2)(e)(iii)(A).
191 (iii) Subsections (2)(g)(i) and (ii) apply to transactions subject to a tax under:
192 (A) Subsection (1)(b);
193 (B) Subsection (1)(c);
194 (C) Subsection (1)(d);
195 (D) Subsection (1)(e);
196 (E) Subsection (1)(f);
197 (F) Subsection (1)(g);
198 (G) Subsection (1)(h);
199 (H) Subsection (1)(i);
200 (I) Subsection (1)(j); or
201 (J) Subsection (1)(k).
202 (h) (i) For a tax rate described in Subsection (2)(h)(ii), if a tax due on a catalogue sale
203 is computed on the basis of sales and use tax rates published in the catalogue, a tax rate repeal
204 or change in a tax rate takes effect:
205 (A) on the first day of a calendar quarter; and
206 (B) beginning 60 days after the effective date of the tax rate repeal or tax rate change.
207 (ii) Subsection (2)(h)(i) applies to the tax rates described in the following:
208 (A) Subsection (2)(a)(i);
209 (B) Subsection (2)(b)(i);
210 (C) Subsection (2)(c)(i);
211 (D) Subsection (2)(d)(i);
212 (E) Subsection (2)(e)(ii)(A); or

213 (F) Subsection (2)(e)(iii)(A).
214 (iii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
215 the commission may by rule define the term "catalogue sale."
216 (3) (a) Except as provided in Subsections (4) through (10), the following state taxes
217 shall be deposited into the General Fund:
218 (i) the tax imposed by Subsection (2)(a)(i);
219 (ii) the tax imposed by Subsection (2)(b)(i);
220 (iii) the tax imposed by Subsection (2)(c)(i);
221 (iv) the tax imposed by Subsection (2) (d)(i);
222 (v) the tax imposed by Subsection (2)(e)(ii)(A); and
223 (vi) the tax imposed by Subsection (2)(e)(iii)(A).
224 (b) The following local taxes shall be distributed to a county, city, or town as provided
225 in this chapter:
226 (i) the tax imposed by Subsection (2)(a)(ii);
227 (ii) the tax imposed by Subsection (2)(b)(ii);
228 (iii) the tax imposed by Subsection (2)(c)(ii); and
229 (iv) the tax imposed by Subsection (2)(e)(ii)(B).
230 (c) (i) Notwithstanding any provision of this chapter, each county, city, or town in the
231 state shall receive the county's, city's, or town's proportionate share of the revenues generated
232 by the following local taxes as provided in Subsection (3)(c)(ii):
233 (A) the local tax described in Subsection (2)(d)(ii); and
234 (B) the local tax described in Subsection (2)(e)(iii)(B).
235 (ii) For revenues generated by a tax described in Subsection (3)(c)(i), the commission
236 shall determine a county's, city's, or town's proportionate share of the revenues by:
237 (A) calculating an amount equal to the population of the unincorporated area of the
238 county, city, or town divided by the total population of the state; and
239 (B) multiplying the amount determined under Subsection (3)(c)(ii)(A) by the total
240 amount of revenues generated by the taxes described in Subsection (3)(c)(i) for all counties,
241 cities, and towns.
242 (iii) (A) Except as provided in Subsection (3)(c)(iii)(B), population figures for
243 purposes of this section shall be derived from the most recent official census or census estimate

244 of the United States Census Bureau.
245 (B) If a needed population estimate is not available from the United States Census
246 Bureau, population figures shall be derived from the estimate from the Utah Population
247 Estimates Committee created by executive order of the governor.
248 (4) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
249 2003, the lesser of the following amounts shall be used as provided in Subsections (4)(b)
250 through (g):
251 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated:
252 (A) by a 1/16% tax rate on the transactions described in Subsection (1); and
253 (B) for the fiscal year; or
254 (ii) $17,500,000.
255 (b) (i) For a fiscal year beginning on or after July 1, 2003, 14% of the amount
256 described in Subsection (4)(a) shall be transferred each year as dedicated credits to the
257 Department of Natural Resources to:
258 (A) implement the measures described in Subsections 63-34-14 (4)(a) through (d) to
259 protect sensitive plant and animal species; or
260 (B) award grants, up to the amount authorized by the Legislature in an appropriations
261 act, to political subdivisions of the state to implement the measures described in Subsections
262 63-34-14 (4)(a) through (d) to protect sensitive plant and animal species.
263 (ii) Money transferred to the Department of Natural Resources under Subsection
264 (4)(b)(i) may not be used to assist the United States Fish and Wildlife Service or any other
265 person to list or attempt to have listed a species as threatened or endangered under the
266 Endangered Species Act of 1973, 16 U.S.C. Sec. 1531 et seq.
267 (iii) At the end of each fiscal year:
268 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
269 Conservation and Development Fund created in Section 73-10-24 ;
270 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
271 Program Subaccount created in Section 73-10c-5 ; and
272 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
273 Program Subaccount created in Section 73-10c-5 .
274 (c) For a fiscal year beginning on or after July 1, 2003, 3% of the amount described in

275 Subsection (4)(a) shall be deposited each year in the Agriculture Resource Development Fund
276 created in Section 4-18-6 .
277 (d) (i) For a fiscal year beginning on or after July 1, 2003, 1% of the amount described
278 in Subsection (4)(a) shall be transferred each year as dedicated credits to the Division of Water
279 Rights to cover the costs incurred in hiring legal and technical staff for the adjudication of
280 water rights.
281 (ii) At the end of each fiscal year:
282 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
283 Conservation and Development Fund created in Section 73-10-24 ;
284 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
285 Program Subaccount created in Section 73-10c-5 ; and
286 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
287 Program Subaccount created in Section 73-10c-5 .
288 (e) (i) For a fiscal year beginning on or after July 1, 2003, 41% of the amount described
289 in Subsection (4)(a) shall be deposited in the Water Resources Conservation and Development
290 Fund created in Section 73-10-24 for use by the Division of Water Resources.
291 (ii) In addition to the uses allowed of the Water Resources Conservation and
292 Development Fund under Section 73-10-24 , the Water Resources Conservation and
293 Development Fund may also be used to:
294 (A) conduct hydrologic and geotechnical investigations by the Division of Water
295 Resources in a cooperative effort with other state, federal, or local entities, for the purpose of
296 quantifying surface and ground water resources and describing the hydrologic systems of an
297 area in sufficient detail so as to enable local and state resource managers to plan for and
298 accommodate growth in water use without jeopardizing the resource;
299 (B) fund state required dam safety improvements; and
300 (C) protect the state's interest in interstate water compact allocations, including the
301 hiring of technical and legal staff.
302 (f) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described
303 in Subsection (4)(a) shall be deposited in the Utah Wastewater Loan Program Subaccount
304 created in Section 73-10c-5 for use by the Water Quality Board to fund wastewater projects.
305 (g) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described

306 in Subsection (4)(a) shall be deposited in the Drinking Water Loan Program Subaccount
307 created in Section 73-10c-5 for use by the Division of Drinking Water to:
308 (i) provide for the installation and repair of collection, treatment, storage, and
309 distribution facilities for any public water system, as defined in Section 19-4-102 ;
310 (ii) develop underground sources of water, including springs and wells; and
311 (iii) develop surface water sources.
312 (5) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
313 2006, the difference between the following amounts shall be expended as provided in this
314 Subsection (5), if that difference is greater than $1:
315 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated for the
316 fiscal year by a 1/16% tax rate on the transactions described in Subsection (1); and
317 (ii) $17,500,000.
318 (b) (i) The first $500,000 of the difference described in Subsection (5)(a) shall be:
319 (A) transferred each fiscal year to the Department of Natural Resources as dedicated
320 credits; and
321 (B) expended by the Department of Natural Resources for watershed rehabilitation or
322 restoration.
323 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
324 in Subsection (5)(b)(i) shall lapse to the Water Resources Conservation and Development Fund
325 created in Section 73-10-24 .
326 (c) (i) After making the transfer required by Subsection (5)(b)(i), $150,000 of the
327 remaining difference described in Subsection (5)(a) shall be:
328 (A) transferred each fiscal year to the Division of Water Resources as dedicated
329 credits; and
330 (B) expended by the Division of Water Resources for cloud-seeding projects
331 authorized by Title 73, Chapter 15, Modification of Weather.
332 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
333 in Subsection (5)(c)(i) shall lapse to the Water Resources Conservation and Development Fund
334 created in Section 73-10-24 .
335 (d) After making the transfers required by Subsections (5)(b) and (c), 94% of the
336 remaining difference described in Subsection (5)(a) shall be deposited into the Water

337 Resources Conservation and Development Fund created in Section 73-10-24 for use by the
338 Division of Water Resources for:
339 (i) preconstruction costs:
340 (A) as defined in Subsection 73-26-103 (6) for projects authorized by Title 73, Chapter
341 26, Bear River Development Act; and
342 (B) as defined in Subsection 73-28-103 (8) for the Lake Powell Pipeline project
343 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act;
344 (ii) the cost of employing a civil engineer to oversee any project authorized by Title 73,
345 Chapter 26, Bear River Development Act;
346 (iii) the cost of employing a civil engineer to oversee the Lake Powell Pipeline project
347 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act; and
348 (iv) other uses authorized under Sections 73-10-24 , 73-10-25.1 , 73-10-30 , and
349 Subsection (4)(e)(ii) after funding the uses specified in Subsections (5)(d)(i) through (iii).
350 (e) Any unexpended monies described in Subsection (5)(d) that remain in the Water
351 Resources Conservation and Development Fund at the end of the fiscal year are nonlapsing.
352 (f) After making the transfers required by Subsections (5)(b) and (c) and subject to
353 Subsection (5)(g), 6% of the remaining difference described in Subsection (5)(a) shall be
354 transferred each year as dedicated credits to the Division of Water Rights to cover the costs
355 incurred for employing additional technical staff for the administration of water rights.
356 (g) At the end of each fiscal year, any unexpended dedicated credits described in
357 Subsection (5)(f) over $150,000 lapse to the Water Resources Conservation and Development
358 Fund created in Section 73-10-24 .
359 (6) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
360 2003, and for taxes listed under Subsection (3)(a), the amount of revenue generated by a 1/16%
361 tax rate on the transactions described in Subsection (1) for the fiscal year shall be deposited in
362 the Transportation Fund created by Section 72-2-102 .
363 (7) (a) Notwithstanding Subsection (3)(a) and until Subsection (7)(b) applies,
364 beginning on January 1, 2000, the Division of Finance shall deposit into the Centennial
365 Highway Fund Restricted Account created in Section 72-2-118 a portion of the taxes listed
366 under Subsection (3)(a) equal to the revenues generated by a 1/64% tax rate on the taxable
367 transactions under Subsection (1).

368 (b) Notwithstanding Subsection (3)(a), when the highway general obligation bonds
369 have been paid off and the highway projects completed that are intended to be paid from
370 revenues deposited in the Centennial Highway Fund Restricted Account as determined by the
371 Executive Appropriations Committee under Subsection 72-2-118 (6)(d), the Division of
372 Finance shall deposit into the Transportation Investment Fund of 2005 created by Section
373 72-2-124 a portion of the taxes listed under Subsection (3)(a) equal to the revenues generated
374 by a 1/64% tax rate on the taxable transactions under Subsection (1).
375 (8) (a) Notwithstanding Subsection (3)(a), for fiscal years beginning on or after fiscal
376 year 2004-05, the commission shall each year on or before the September 30 immediately
377 following the last day of the fiscal year deposit the difference described in Subsection (8)(b)
378 into the Remote Sales Restricted Account created in Section 59-12-103.2 if that difference is
379 greater than $0.
380 (b) The difference described in Subsection (8)(a) is equal to the difference between:
381 (i) the total amount of the revenues the commission received from sellers collecting the
382 taxes described in Subsections (2)(d)(i) and (2)(e)(iii)(A) for the fiscal year immediately
383 preceding the September 30 described in Subsection (8)(a); and
384 (ii) $7,279,673.
385 (9) (a