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S.B. 29
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TRUTH IN TAXATION AMENDMENTS
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2008 GENERAL SESSION
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STATE OF UTAH
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Chief Sponsor: Wayne L. Niederhauser
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House Sponsor:
John Dougall
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LONG TITLE
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Committee Note:
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The Revenue and Taxation Interim Committee recommended this bill.
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General Description:
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This bill amends provisions in the Minimum School Program Act and the Property Tax
12
Act relating to property tax advertisement and hearing requirements.
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Highlighted Provisions:
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This bill:
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. amends certain exemptions from property tax advertisement and hearing
16
requirements;
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. requires a school district to include a statement in its proposition submitted to its
18
voters voting on the imposition or modification of a voted leeway program under
19
certain circumstances;
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. requires a taxing entity to submit certain property tax levies to a vote of the people
21
prior to imposing those tax levies;
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. provides procedures and requirements for imposing certain tax rates in excess of a
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taxing entity's certified tax rate;
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. defines terms; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill takes effect on July 1, 2008.
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Utah Code Sections Affected:
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AMENDS:
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17-34-3, as last amended by Laws of Utah 2005, First Special Session, Chapter 9
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17C-1-408, as renumbered and amended by Laws of Utah 2006, Chapter 359
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53A-16-106, as last amended by Laws of Utah 1994, Chapter 12
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53A-17a-133, as last amended by Laws of Utah 2006, Chapter 26
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53A-19-102, as last amended by Laws of Utah 2007, Chapter 92
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53A-19-105, as last amended by Laws of Utah 2003, Chapter 122
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59-2-102, as last amended by Laws of Utah 2007, Chapters 107, 234, and 329
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59-2-505, as last amended by Laws of Utah 2003, Chapter 208
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59-2-908, as last amended by Laws of Utah 1995, Chapter 278
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59-2-913, as last amended by Laws of Utah 2007, Chapter 107
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59-2-914, as last amended by Laws of Utah 1995, Chapter 278
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59-2-918, as last amended by Laws of Utah 2006, Chapters 26 and 104
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59-2-918.5, as last amended by Laws of Utah 2000, Chapter 61
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59-2-918.6, as enacted by Laws of Utah 2007, Chapter 297
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59-2-919, as last amended by Laws of Utah 2006, Chapters 26 and 104
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59-2-924, as last amended by Laws of Utah 2007, Chapters 107 and 329
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59-2-1004, as last amended by Laws of Utah 2001, Chapter 106
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59-2-1330, as last amended by Laws of Utah 2002, Chapters 196 and 240
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ENACTS:
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59-2-919.1, Utah Code Annotated 1953
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59-2-919.2, Utah Code Annotated 1953
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59-2-924.2, Utah Code Annotated 1953
54
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
17-34-3
is amended to read:
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17-34-3. Taxes or service charges.
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(1) (a) If a county furnishes the municipal-type services and functions described in
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Section
17-34-1
to areas of the county outside the limits of incorporated cities or towns, the
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entire cost of the services or functions so furnished shall be defrayed from funds that the county
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has derived from:
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(i) taxes that the county may lawfully levy or impose outside the limits of incorporated
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towns or cities;
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(ii) service charges or fees the county may impose upon the persons benefited in any
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way by the services or functions; or
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(iii) a combination of these sources.
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(b) As the taxes or service charges or fees are levied and collected, they shall be placed
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in a special revenue fund of the county and shall be disbursed only for the rendering of the
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services or functions established in Section
17-34-1
within the unincorporated areas of the
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county or as provided in Subsection
10-2-121
(2).
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(2) For the purpose of levying taxes, service charges, or fees provided in this section,
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the county legislative body may establish a district or districts in the unincorporated areas of
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the county.
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(3) Nothing contained in this chapter may be construed to authorize counties to impose
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or levy taxes not otherwise allowed by law.
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[(4) (a) A county required under Subsection
17-34-1
(4) to provide advanced life
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support and paramedic services to the unincorporated area of the county and that previously
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paid for those services through a countywide levy may increase its levy under Subsection
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(1)(a)(i) to generate in the unincorporated area of the county the same amount of revenue as the
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county loses from that area due to the required decrease in the countywide certified tax rate
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under Subsection
59-2-924
(2)(k)(i).]
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[(b) An increase in tax rate under Subsection (4)(a) is exempt from the notice and
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hearing requirements of Sections
59-2-918
and
59-2-919
.]
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[(5)] (4) Notwithstanding any other provision of this chapter, a county providing fire,
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paramedic, and police protection services in a designated recreational area, as provided in
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Subsection
17-34-1
(5), may fund those services from the county general fund with revenues
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derived from both inside and outside the limits of cities and towns, and the funding of those
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services is not limited to unincorporated area revenues.
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Section 2.
Section
17C-1-408
is amended to read:
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17C-1-408. Base taxable value to be adjusted to reflect other changes.
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(1) (a) (i) As used in this Subsection (1), "qualifying decrease" means:
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(A) a decrease of more than 20% from the previous tax year's levy; or
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(B) a cumulative decrease over a consecutive five-year period of more than 100% from
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the levy in effect at the beginning of the five-year period.
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(ii) The year in which a qualifying decrease under Subsection (1)(a)(i)(B) occurs is the
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fifth year of the five-year period.
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(b) If there is a qualifying decrease in the minimum basic school levy under Section
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59-2-902
that would result in a reduction of the amount of tax increment to be paid to an
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agency:
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(i) the base taxable value of taxable property within the project area shall be reduced in
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the year of the qualifying decrease to the extent necessary, even if below zero, to provide the
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agency with approximately the same amount of tax increment that would have been paid to the
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agency each year had the qualifying decrease not occurred; and
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(ii) the amount of tax increment paid to the agency each year for the payment of bonds
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and indebtedness may not be less than what would have been paid to the agency if there had
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been no qualifying decrease.
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(2) (a) The amount of the base taxable value to be used in determining tax increment
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shall be:
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(i) increased or decreased by the amount of an increase or decrease that results from:
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(A) a statute enacted by the Legislature or by the people through an initiative;
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(B) a judicial decision;
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(C) an order from the State Tax Commission to a county to adjust or factor its
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assessment rate under Subsection
59-2-704
(2);
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(D) a change in exemption provided in Utah Constitution Article XIII, Section 2, or
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Section
59-2-103
; or
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(E) an increase or decrease in the percentage of fair market value, as defined under
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Section
59-2-102
; and
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(ii) reduced for any year to the extent necessary, even if below zero, to provide an
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agency with approximately the same amount of money the agency would have received without
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a reduction in the county's certified tax rate if:
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(A) in that year there is a decrease in the county's certified tax rate under Subsection
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[
59-2-924
(2)(c) or (d)(i)]
59-2-924.2
(2) or (3)(a);
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(B) the amount of the decrease is more than 20% of the county's certified tax rate of the
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previous year; and
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(C) the decrease would result in a reduction of the amount of tax increment to be paid
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to the agency.
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(b) Notwithstanding an increase or decrease under Subsection (2)(a), the amount of tax
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increment paid to an agency each year for payment of bonds or other indebtedness may not be
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less than would have been paid to the agency each year if there had been no increase or
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decrease under Subsection (2)(a).
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Section 3.
Section
53A-16-106
is amended to read:
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53A-16-106. Annual certification of tax rate proposed by local school board --
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Inclusion of school district budget -- Modified filing date.
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(1) Prior to June 22 of each year, each local school board shall certify to the county
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legislative body in which the district is located, on forms prescribed by the State Tax
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Commission, the proposed tax rate approved by the local school board.
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(2) A copy of the district's budget, including items under Section
53A-19-101
, and a
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certified copy of the local school board's resolution which approved the budget and set the tax
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rate for the subsequent school year beginning July 1 shall accompany the tax rate.
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(3) If the tax rate approved by the board is in excess of the "certified tax rate" as
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defined under Subsection
59-2-924[(2)](3)
(a), the date for filing the tax rate and budget
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adopted by the board shall be that established under Section
59-2-919
.
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Section 4.
Section
53A-17a-133
is amended to read:
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53A-17a-133. State-supported voted leeway program authorized -- Election
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requirements -- State guarantee -- Reconsideration of the program.
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(1) An election to consider adoption or modification of a voted leeway program is
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required if initiative petitions signed by 10% of the number of electors who voted at the last
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preceding general election are presented to the local school board or by action of the board.
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(2) (a) (i) To establish a voted leeway program, a majority of the electors of a district
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voting at an election in the manner set forth in Section
53A-16-110
must vote in favor of a
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special tax.
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(ii) The tax rate may not exceed .002 per dollar of taxable value.
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(b) The district may maintain a school program which exceeds the cost of the program
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referred to in Section
53A-17a-145
with this voted leeway.
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(c) In order to receive state support the first year, a district must receive voter approval
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no later than December 1 of the year prior to implementation.
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(3) (a) Under the voted leeway program, the state shall contribute an amount sufficient
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to guarantee $17.54 per weighted pupil unit for each .0001 of the first .0016 per dollar of
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taxable value.
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(b) The same dollar amount guarantee per weighted pupil unit for the .0016 per dollar
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of taxable value under Subsection (3)(a) shall apply to the board-approved leeway authorized
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in Section
53A-17a-134
, so that the guarantee shall apply up to a total of .002 per dollar of
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taxable value if a school district levies a tax rate under both programs.
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(c) (i) Beginning July 1, 2005, the $17.54 guarantee under Subsections (3)(a) and (b)
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shall be indexed each year to the value of the weighted pupil unit by making the value of the
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guarantee equal to .008544 times the value of the prior year's weighted pupil unit.
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(ii) The guarantee shall increase by .0005 times the value of the prior year's weighted
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pupil unit for each succeeding year until the guarantee is equal to .010544 times the value of
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the prior year's weighted pupil unit.
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(d) (i) The amount of state guarantee money to which a school district would otherwise
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be entitled to under this Subsection (3) may not be reduced for the sole reason that the district's
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levy is reduced as a consequence of changes in the certified tax rate under Section
59-2-924
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pursuant to changes in property valuation.
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(ii) Subsection (3)(d)(i) applies for a period of two years following any such change in
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the certified tax rate.
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(4) (a) An election to modify an existing voted leeway program is not a reconsideration
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of the existing program unless the proposition submitted to the electors expressly so states.
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(b) A majority vote opposing a modification does not deprive the district of authority to
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continue an existing program.
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(c) If adoption of a leeway program is contingent upon an offset reducing other local
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school board levies, the board must allow the electors, in an election, to consider modifying or
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discontinuing the program prior to a subsequent increase in other levies that would increase the
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total local school board levy.
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(d) Nothing contained in this section terminates, without an election, the authority of a
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school district to continue an existing voted leeway program previously authorized by the
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voters.
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(5) Notwithstanding Section
59-2-918
, a school district may budget an increased
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amount of ad valorem property tax revenue derived from a voted leeway imposed under this
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section in addition to revenue from new growth as defined in Subsection
59-2-924
[(2)](4),
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without having to comply with the advertisement requirements of Section
59-2-918
, if:
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(a) the voted leeway is approved:
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[(a)] (i) in accordance with Section
53A-16-110
on or after January 1, 2003; and
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[(b)] (ii) within the four-year period immediately preceding the year in which the
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school district seeks to budget an increased amount of ad valorem property tax revenue derived
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from the voted leeway[.]; and
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(b) for a voted leeway approved or modified in accordance with Section
53A-16-116
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on or after January 1, 2009, the school district complies with the requirements of Subsection
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(7).
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(6) Notwithstanding Section
59-2-919
, a school district may levy a tax rate under this
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section that exceeds the certified tax rate without having to comply with the advertisement
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requirements of Section
59-2-919
if:
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(a) the levy exceeds the certified tax rate as the result of a school district budgeting an
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increased amount of ad valorem property tax revenue derived from a voted leeway imposed
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under this section; [and]
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(b) if the voted leeway was approved:
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(i) in accordance with Section
53A-16-110
on or after January 1, 2003; and
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(ii) within the four-year period immediately preceding the year in which the school
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district seeks to budget an increased amount of ad valorem property tax revenue derived from
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the voted leeway[.]; and
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(c) for a voted leeway approved or modified in accordance with Section
53A-16-116
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on or after January 1, 2009, the school district complies with requirements of Subsection (7).
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(7) For purposes of Subsection (5)(b) or (6)(c), the proposition submitted to the
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electors regarding the adoption or modification of a voted leeway program shall contain the
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following statement:
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"A vote in favor of imposing this levy means that this levy will be exempt from the
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public advertisement requirements for the next five years, which means an advertisement will
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not be published if the school district proposes to increase its budget over and above the
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revenues received the previous year."
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Section 5.
Section
53A-19-102
is amended to read:
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53A-19-102. Local school boards budget procedures.
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(1) Prior to June 22 of each year, each local school board shall adopt a budget and
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make appropriations for the next fiscal year. If the tax rate in the proposed budget exceeds the
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certified tax rate defined in [Subsection] Section
59-2-924
[(2)], the board shall comply with
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Sections
59-2-918
and
59-2-919
in adopting the budget, except as provided by Section
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53A-17a-133
.
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(2) Prior to the adoption of a budget containing a tax rate which does not exceed the
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certified tax rate, the board shall hold a public hearing, as defined in Section
10-9a-103
, on the
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proposed budget. In addition to complying with Title 52, Chapter 4, Open and Public Meetings
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Act, in regards to the hearing, the board shall do the following:
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(a) publish the required newspaper notice at least ten days prior to the hearing; and
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(b) file a copy of the proposed budget with the board's business administrator for public
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inspection at least ten days prior to the hearing.
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(3) The board shall file a copy of the adopted budget with the state auditor and the
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State Board of Education.
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Section 6.
Section
53A-19-105
is amended to read:
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53A-19-105. School district interfund transfers.
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(1) A school district shall spend revenues only within the fund for which they were
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originally authorized, levied, collected, or appropriated.
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(2) Except as otherwise provided in this section, school district interfund transfers of
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residual equity are prohibited.
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(3) The State Board of Education may authorize school district interfund transfers of
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residual equity when a district states its intent to create a new fund or expand, contract, or
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liquidate an existing fund.
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(4) The State Board of Education may also authorize school district interfund transfers
245
of residual equity for a financially distressed district if the board determines the following:
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(a) the district has a significant deficit in its maintenance and operations fund caused
247
by circumstances not subject to the administrative decisions of the district;
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(b) the deficit cannot be reasonably reduced under Section
53A-19-104
; and
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(c) without the transfer, the school district will not be capable of meeting statewide
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educational standards adopted by the State Board of Education.
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(5) The board shall develop standards for defining and aiding financially distressed
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school districts under this section in accordance with Title 63, Chapter 46a, Utah
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Administrative Rulemaking Act.
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(6) (a) All debt service levies not subject to certified tax rate hearings shall be recorded
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and reported in the debt service fund.
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(b) Debt service levies under Subsection
59-2-924
[(2)(a)(v)(C)](3)(e)(iii) that are not
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subject to the certified tax rate hearing requirements of Sections
59-2-918
and
59-2-919
may
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not be used for any purpose other than retiring general obligation debt.
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(c) Amounts from these levies remaining in the debt service fund at the end of a fiscal
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year shall be used in subsequent years for general obligation debt retirement.
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(d) Any amounts left in the debt service fund after all general obligation debt has been
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retired may be transferred to the capital projects fund upon completion of the budgetary hearing
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process required under Section
53A-19-102
.
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Section 7.
Section
59-2-102
is amended to read:
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59-2-102. Definitions.
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As used in this chapter and title:
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(1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
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engaging in dispensing activities directly affecting agriculture or horticulture with an
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airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
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rotorcraft's use for agricultural and pest control purposes.
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(2) "Air charter service" means an air carrier operation which requires the customer to
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hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
273
trip.
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(3) "Air contract service" means an air carrier operation available only to customers
275
who engage the services of the carrier through a contractual agreement and excess capacity on
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any trip and is not available to the public at large.
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(4) "Aircraft" is as defined in Section
72-10-102
.
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(5) "Airline" means any air carrier operating interstate routes on a scheduled basis
279
which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
280
routes.
281
(6) "Assessment roll" means a permanent record of the assessment of property as
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assessed by the county assessor and the commission and may be maintained manually or as a
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computerized file as a consolidated record or as multiple records by type, classification, or
284
categories.
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(7) (a) "Certified revenue levy" means a property tax levy that provides the same
286
amount of ad valorem property tax revenue as was collected for the prior year, plus new
287
growth, but exclusive of revenue from collections from redemptions, interest, and penalties.
288
(b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
289
include property tax revenue received by a taxing entity from personal property that is:
290
(i) assessed by a county assessor in accordance with Part 3, County Assessment; and
291
(ii) semiconductor manufacturing equipment.
292
(8) "County-assessed commercial vehicle" means:
293
(a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
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Section
41-1a-301
and is not operated interstate to transport the vehicle owner's goods or
295
property in furtherance of the owner's commercial enterprise;
296
(b) any passenger vehicle owned by a business and used by its employees for
297
transportation as a company car or vanpool vehicle; and
298
(c) vehicles which are:
299
(i) especially constructed for towing or wrecking, and which are not otherwise used to
300
transport goods, merchandise, or people for compensation;
301
(ii) used or licensed as taxicabs or limousines;
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(iii) used as rental passenger cars, travel trailers, or motor homes;
303
(iv) used or licensed in this state for use as ambulances or hearses;
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(v) especially designed and used for garbage and rubbish collection; or
305
(vi) used exclusively to transport students or their instructors to or from any private,
306
public, or religious school or school activities.
307
(9) (a) Except as provided in Subsection (9)(b), for purposes of Section
59-2-801
,
308
"designated tax area" means a tax area created by the overlapping boundaries of only the
309
following taxing entities:
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(i) a county; and
311
(ii) a school district.
312
(b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
313
by the overlapping boundaries of:
314
(i) the taxing entities described in Subsection (9)(a); and
315
(ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
316
and the boundaries of the city or town are identical; or
317
(B) a special service district if the boundaries of the school district under Subsection
318
(9)(a) are located entirely within the special service district.
319
(10) "Eligible judgment" means a final and unappealable judgment or order under
320
Section
59-2-1330
:
321
(a) that became a final and unappealable judgment or order no more than 14 months
322
prior to the day on which the notice required by [Subsection
59-2-919
(4)] Section
59-2-919.1
is
323
required to be mailed; and
324
(b) for which a taxing entity's share of the final and unappealable judgment or order is
325
greater than or equal to the lesser of:
326
(i) $5,000; or
327
(ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
328
previous fiscal year.
329
(11) (a) "Escaped property" means any property, whether personal, land, or any
330
improvements to the property, subject to taxation and is:
331
(i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
332
to the wrong taxpayer by the assessing authority;
333
(ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
334
comply with the reporting requirements of this chapter; or
335
(iii) undervalued because of errors made by the assessing authority based upon
336
incomplete or erroneous information furnished by the taxpayer.
337
(b) Property which is undervalued because of the use of a different valuation
338
methodology or because of a different application of the same valuation methodology is not
339
"escaped property."
340
(12) "Fair market value" means the amount at which property would change hands
341
between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
342
and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
343
market value" shall be determined using the current zoning laws applicable to the property in
344
question, except in cases where there is a reasonable probability of a change in the zoning laws
345
affecting that property in the tax year in question and the change would have an appreciable
346
influence upon the value.
347
(13) "Farm machinery and equipment," for purposes of the exemption provided under
348
Section
59-2-1101
, means tractors, milking equipment and storage and cooling facilities, feed
349
handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
350
tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
351
equipment used primarily for agricultural purposes; but does not include vehicles required to be
352
registered with the Motor Vehicle Division or vehicles or other equipment used for business
353
purposes other than farming.
354
(14) "Geothermal fluid" means water in any form at temperatures greater than 120
355
degrees centigrade naturally present in a geothermal system.
356
(15) "Geothermal resource" means:
357
(a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
358
and
359
(b) the energy, in whatever form, including pressure, present in, resulting from, created
360
by, or which may be extracted from that natural heat, directly or through a material medium.
361
(16) (a) "Goodwill" means:
362
(i) acquired goodwill that is reported as goodwill on the books and records:
363
(A) of a taxpayer; and
364
(B) that are maintained for financial reporting purposes; or
365
(ii) the ability of a business to:
366
(A) generate income:
367
(I) that exceeds a normal rate of return on assets; and
368
(II) resulting from a factor described in Subsection (16)(b); or
369
(B) obtain an economic or competitive advantage resulting from a factor described in
370
Subsection (16)(b).
371
(b) The following factors apply to Subsection (16)(a)(ii):
372
(i) superior management skills;
373
(ii) reputation;
374