S.B. 29

1

TRUTH IN TAXATION AMENDMENTS
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Wayne L. Niederhauser
5 House Sponsor: John Dougall
6
7 LONG TITLE
8 Committee Note:
9 The Revenue and Taxation Interim Committee recommended this bill.
10 General Description:
11 This bill amends provisions in the Minimum School Program Act and the Property Tax
12 Act relating to property tax advertisement and hearing requirements.
13 Highlighted Provisions:
14 This bill:
15 . amends certain exemptions from property tax advertisement and hearing
16 requirements;
17 . 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;
20 . requires a taxing entity to submit certain property tax levies to a vote of the people
21 prior to imposing those tax levies;
22 . provides procedures and requirements for imposing certain tax rates in excess of a
23 taxing entity's certified tax rate;
24 . defines terms; and
25 . makes technical changes.
26 Monies Appropriated in this Bill:
27 None

28 Other Special Clauses:
29 This bill takes effect on July 1, 2008.
30 Utah Code Sections Affected:
31 AMENDS:
32 17-34-3, as last amended by Laws of Utah 2005, First Special Session, Chapter 9
33 17C-1-408, as renumbered and amended by Laws of Utah 2006, Chapter 359
34 53A-16-106, as last amended by Laws of Utah 1994, Chapter 12
35 53A-17a-133, as last amended by Laws of Utah 2006, Chapter 26
36 53A-19-102, as last amended by Laws of Utah 2007, Chapter 92
37 53A-19-105, as last amended by Laws of Utah 2003, Chapter 122
38 59-2-102, as last amended by Laws of Utah 2007, Chapters 107, 234, and 329
39 59-2-505, as last amended by Laws of Utah 2003, Chapter 208
40 59-2-908, as last amended by Laws of Utah 1995, Chapter 278
41 59-2-913, as last amended by Laws of Utah 2007, Chapter 107
42 59-2-914, as last amended by Laws of Utah 1995, Chapter 278
43 59-2-918, as last amended by Laws of Utah 2006, Chapters 26 and 104
44 59-2-918.5, as last amended by Laws of Utah 2000, Chapter 61
45 59-2-918.6, as enacted by Laws of Utah 2007, Chapter 297
46 59-2-919, as last amended by Laws of Utah 2006, Chapters 26 and 104
47 59-2-924, as last amended by Laws of Utah 2007, Chapters 107 and 329
48 59-2-1004, as last amended by Laws of Utah 2001, Chapter 106
49 59-2-1330, as last amended by Laws of Utah 2002, Chapters 196 and 240
50 ENACTS:
51 59-2-919.1, Utah Code Annotated 1953
52 59-2-919.2, Utah Code Annotated 1953
53 59-2-924.2, Utah Code Annotated 1953
54
55 Be it enacted by the Legislature of the state of Utah:
56 Section 1. Section 17-34-3 is amended to read:
57 17-34-3. Taxes or service charges.
58 (1) (a) If a county furnishes the municipal-type services and functions described in

59 Section 17-34-1 to areas of the county outside the limits of incorporated cities or towns, the
60 entire cost of the services or functions so furnished shall be defrayed from funds that the county
61 has derived from:
62 (i) taxes that the county may lawfully levy or impose outside the limits of incorporated
63 towns or cities;
64 (ii) service charges or fees the county may impose upon the persons benefited in any
65 way by the services or functions; or
66 (iii) a combination of these sources.
67 (b) As the taxes or service charges or fees are levied and collected, they shall be placed
68 in a special revenue fund of the county and shall be disbursed only for the rendering of the
69 services or functions established in Section 17-34-1 within the unincorporated areas of the
70 county or as provided in Subsection 10-2-121 (2).
71 (2) For the purpose of levying taxes, service charges, or fees provided in this section,
72 the county legislative body may establish a district or districts in the unincorporated areas of
73 the county.
74 (3) Nothing contained in this chapter may be construed to authorize counties to impose
75 or levy taxes not otherwise allowed by law.
76 [(4) (a) A county required under Subsection 17-34-1 (4) to provide advanced life
77 support and paramedic services to the unincorporated area of the county and that previously
78 paid for those services through a countywide levy may increase its levy under Subsection
79 (1)(a)(i) to generate in the unincorporated area of the county the same amount of revenue as the
80 county loses from that area due to the required decrease in the countywide certified tax rate
81 under Subsection 59-2-924 (2)(k)(i).]
82 [(b) An increase in tax rate under Subsection (4)(a) is exempt from the notice and
83 hearing requirements of Sections 59-2-918 and 59-2-919 .]
84 [(5)] (4) Notwithstanding any other provision of this chapter, a county providing fire,
85 paramedic, and police protection services in a designated recreational area, as provided in
86 Subsection 17-34-1 (5), may fund those services from the county general fund with revenues
87 derived from both inside and outside the limits of cities and towns, and the funding of those
88 services is not limited to unincorporated area revenues.
89 Section 2. Section 17C-1-408 is amended to read:

90 17C-1-408. Base taxable value to be adjusted to reflect other changes.
91 (1) (a) (i) As used in this Subsection (1), "qualifying decrease" means:
92 (A) a decrease of more than 20% from the previous tax year's levy; or
93 (B) a cumulative decrease over a consecutive five-year period of more than 100% from
94 the levy in effect at the beginning of the five-year period.
95 (ii) The year in which a qualifying decrease under Subsection (1)(a)(i)(B) occurs is the
96 fifth year of the five-year period.
97 (b) If there is a qualifying decrease in the minimum basic school levy under Section
98 59-2-902 that would result in a reduction of the amount of tax increment to be paid to an
99 agency:
100 (i) the base taxable value of taxable property within the project area shall be reduced in
101 the year of the qualifying decrease to the extent necessary, even if below zero, to provide the
102 agency with approximately the same amount of tax increment that would have been paid to the
103 agency each year had the qualifying decrease not occurred; and
104 (ii) the amount of tax increment paid to the agency each year for the payment of bonds
105 and indebtedness may not be less than what would have been paid to the agency if there had
106 been no qualifying decrease.
107 (2) (a) The amount of the base taxable value to be used in determining tax increment
108 shall be:
109 (i) increased or decreased by the amount of an increase or decrease that results from:
110 (A) a statute enacted by the Legislature or by the people through an initiative;
111 (B) a judicial decision;
112 (C) an order from the State Tax Commission to a county to adjust or factor its
113 assessment rate under Subsection 59-2-704 (2);
114 (D) a change in exemption provided in Utah Constitution Article XIII, Section 2, or
115 Section 59-2-103 ; or
116 (E) an increase or decrease in the percentage of fair market value, as defined under
117 Section 59-2-102 ; and
118 (ii) reduced for any year to the extent necessary, even if below zero, to provide an
119 agency with approximately the same amount of money the agency would have received without
120 a reduction in the county's certified tax rate if:

121 (A) in that year there is a decrease in the county's certified tax rate under Subsection
122 [ 59-2-924 (2)(c) or (d)(i)] 59-2-924.2 (2) or (3)(a);
123 (B) the amount of the decrease is more than 20% of the county's certified tax rate of the
124 previous year; and
125 (C) the decrease would result in a reduction of the amount of tax increment to be paid
126 to the agency.
127 (b) Notwithstanding an increase or decrease under Subsection (2)(a), the amount of tax
128 increment paid to an agency each year for payment of bonds or other indebtedness may not be
129 less than would have been paid to the agency each year if there had been no increase or
130 decrease under Subsection (2)(a).
131 Section 3. Section 53A-16-106 is amended to read:
132 53A-16-106. Annual certification of tax rate proposed by local school board --
133 Inclusion of school district budget -- Modified filing date.
134 (1) Prior to June 22 of each year, each local school board shall certify to the county
135 legislative body in which the district is located, on forms prescribed by the State Tax
136 Commission, the proposed tax rate approved by the local school board.
137 (2) A copy of the district's budget, including items under Section 53A-19-101 , and a
138 certified copy of the local school board's resolution which approved the budget and set the tax
139 rate for the subsequent school year beginning July 1 shall accompany the tax rate.
140 (3) If the tax rate approved by the board is in excess of the "certified tax rate" as
141 defined under Subsection 59-2-924[(2)](3) (a), the date for filing the tax rate and budget
142 adopted by the board shall be that established under Section 59-2-919 .
143 Section 4. Section 53A-17a-133 is amended to read:
144 53A-17a-133. State-supported voted leeway program authorized -- Election
145 requirements -- State guarantee -- Reconsideration of the program.
146 (1) An election to consider adoption or modification of a voted leeway program is
147 required if initiative petitions signed by 10% of the number of electors who voted at the last
148 preceding general election are presented to the local school board or by action of the board.
149 (2) (a) (i) To establish a voted leeway program, a majority of the electors of a district
150 voting at an election in the manner set forth in Section 53A-16-110 must vote in favor of a
151 special tax.

152 (ii) The tax rate may not exceed .002 per dollar of taxable value.
153 (b) The district may maintain a school program which exceeds the cost of the program
154 referred to in Section 53A-17a-145 with this voted leeway.
155 (c) In order to receive state support the first year, a district must receive voter approval
156 no later than December 1 of the year prior to implementation.
157 (3) (a) Under the voted leeway program, the state shall contribute an amount sufficient
158 to guarantee $17.54 per weighted pupil unit for each .0001 of the first .0016 per dollar of
159 taxable value.
160 (b) The same dollar amount guarantee per weighted pupil unit for the .0016 per dollar
161 of taxable value under Subsection (3)(a) shall apply to the board-approved leeway authorized
162 in Section 53A-17a-134 , so that the guarantee shall apply up to a total of .002 per dollar of
163 taxable value if a school district levies a tax rate under both programs.
164 (c) (i) Beginning July 1, 2005, the $17.54 guarantee under Subsections (3)(a) and (b)
165 shall be indexed each year to the value of the weighted pupil unit by making the value of the
166 guarantee equal to .008544 times the value of the prior year's weighted pupil unit.
167 (ii) The guarantee shall increase by .0005 times the value of the prior year's weighted
168 pupil unit for each succeeding year until the guarantee is equal to .010544 times the value of
169 the prior year's weighted pupil unit.
170 (d) (i) The amount of state guarantee money to which a school district would otherwise
171 be entitled to under this Subsection (3) may not be reduced for the sole reason that the district's
172 levy is reduced as a consequence of changes in the certified tax rate under Section 59-2-924
173 pursuant to changes in property valuation.
174 (ii) Subsection (3)(d)(i) applies for a period of two years following any such change in
175 the certified tax rate.
176 (4) (a) An election to modify an existing voted leeway program is not a reconsideration
177 of the existing program unless the proposition submitted to the electors expressly so states.
178 (b) A majority vote opposing a modification does not deprive the district of authority to
179 continue an existing program.
180 (c) If adoption of a leeway program is contingent upon an offset reducing other local
181 school board levies, the board must allow the electors, in an election, to consider modifying or
182 discontinuing the program prior to a subsequent increase in other levies that would increase the

183 total local school board levy.
184 (d) Nothing contained in this section terminates, without an election, the authority of a
185 school district to continue an existing voted leeway program previously authorized by the
186 voters.
187 (5) Notwithstanding Section 59-2-918 , a school district may budget an increased
188 amount of ad valorem property tax revenue derived from a voted leeway imposed under this
189 section in addition to revenue from new growth as defined in Subsection 59-2-924 [(2)](4),
190 without having to comply with the advertisement requirements of Section 59-2-918 , if:
191 (a) the voted leeway is approved:
192 [(a)] (i) in accordance with Section 53A-16-110 on or after January 1, 2003; and
193 [(b)] (ii) within the four-year period immediately preceding the year in which the
194 school district seeks to budget an increased amount of ad valorem property tax revenue derived
195 from the voted leeway[.]; and
196 (b) for a voted leeway approved or modified in accordance with Section 53A-16-116
197 on or after January 1, 2009, the school district complies with the requirements of Subsection
198 (7).
199 (6) Notwithstanding Section 59-2-919 , a school district may levy a tax rate under this
200 section that exceeds the certified tax rate without having to comply with the advertisement
201 requirements of Section 59-2-919 if:
202 (a) the levy exceeds the certified tax rate as the result of a school district budgeting an
203 increased amount of ad valorem property tax revenue derived from a voted leeway imposed
204 under this section; [and]
205 (b) if the voted leeway was approved:
206 (i) in accordance with Section 53A-16-110 on or after January 1, 2003; and
207 (ii) within the four-year period immediately preceding the year in which the school
208 district seeks to budget an increased amount of ad valorem property tax revenue derived from
209 the voted leeway[.]; and
210 (c) for a voted leeway approved or modified in accordance with Section 53A-16-116
211 on or after January 1, 2009, the school district complies with requirements of Subsection (7).
212 (7) For purposes of Subsection (5)(b) or (6)(c), the proposition submitted to the
213 electors regarding the adoption or modification of a voted leeway program shall contain the

214 following statement:
215 "A vote in favor of imposing this levy means that this levy will be exempt from the
216 public advertisement requirements for the next five years, which means an advertisement will
217 not be published if the school district proposes to increase its budget over and above the
218 revenues received the previous year."
219 Section 5. Section 53A-19-102 is amended to read:
220 53A-19-102. Local school boards budget procedures.
221 (1) Prior to June 22 of each year, each local school board shall adopt a budget and
222 make appropriations for the next fiscal year. If the tax rate in the proposed budget exceeds the
223 certified tax rate defined in [Subsection] Section 59-2-924 [(2)], the board shall comply with
224 Sections 59-2-918 and 59-2-919 in adopting the budget, except as provided by Section
225 53A-17a-133 .
226 (2) Prior to the adoption of a budget containing a tax rate which does not exceed the
227 certified tax rate, the board shall hold a public hearing, as defined in Section 10-9a-103 , on the
228 proposed budget. In addition to complying with Title 52, Chapter 4, Open and Public Meetings
229 Act, in regards to the hearing, the board shall do the following:
230 (a) publish the required newspaper notice at least ten days prior to the hearing; and
231 (b) file a copy of the proposed budget with the board's business administrator for public
232 inspection at least ten days prior to the hearing.
233 (3) The board shall file a copy of the adopted budget with the state auditor and the
234 State Board of Education.
235 Section 6. Section 53A-19-105 is amended to read:
236 53A-19-105. School district interfund transfers.
237 (1) A school district shall spend revenues only within the fund for which they were
238 originally authorized, levied, collected, or appropriated.
239 (2) Except as otherwise provided in this section, school district interfund transfers of
240 residual equity are prohibited.
241 (3) The State Board of Education may authorize school district interfund transfers of
242 residual equity when a district states its intent to create a new fund or expand, contract, or
243 liquidate an existing fund.
244 (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:
246 (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;
248 (b) the deficit cannot be reasonably reduced under Section 53A-19-104 ; and
249 (c) without the transfer, the school district will not be capable of meeting statewide
250 educational standards adopted by the State Board of Education.
251 (5) The board shall develop standards for defining and aiding financially distressed
252 school districts under this section in accordance with Title 63, Chapter 46a, Utah
253 Administrative Rulemaking Act.
254 (6) (a) All debt service levies not subject to certified tax rate hearings shall be recorded
255 and reported in the debt service fund.
256 (b) Debt service levies under Subsection 59-2-924 [(2)(a)(v)(C)](3)(e)(iii) that are not
257 subject to the certified tax rate hearing requirements of Sections 59-2-918 and 59-2-919 may
258 not be used for any purpose other than retiring general obligation debt.
259 (c) Amounts from these levies remaining in the debt service fund at the end of a fiscal
260 year shall be used in subsequent years for general obligation debt retirement.
261 (d) Any amounts left in the debt service fund after all general obligation debt has been
262 retired may be transferred to the capital projects fund upon completion of the budgetary hearing
263 process required under Section 53A-19-102 .
264 Section 7. Section 59-2-102 is amended to read:
265 59-2-102. Definitions.
266 As used in this chapter and title:
267 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
268 engaging in dispensing activities directly affecting agriculture or horticulture with an
269 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
270 rotorcraft's use for agricultural and pest control purposes.
271 (2) "Air charter service" means an air carrier operation which requires the customer to
272 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
273 trip.
274 (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

276 any trip and is not available to the public at large.
277 (4) "Aircraft" is as defined in Section 72-10-102 .
278 (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
282 assessed by the county assessor and the commission and may be maintained manually or as a
283 computerized file as a consolidated record or as multiple records by type, classification, or
284 categories.
285 (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
294 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;
302 (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;
304 (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:
310 (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