S.B. 185

1

ECONOMIC INCENTIVE REVISIONS
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Lyle W. Hillyard
5 House Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill modifies provisions governing economic incentives to companies and
10 individuals for new commercial projects in Utah.
11 Highlighted Provisions:
12 This bill:
13 . places financial limits on the agreements that the Governor's Office of Economic
14 Development may enter into;
15 . voids any agreement that violates those financial limits;
16 . requires legislative appropriation from the Economic Incentive Restricted Account
17 to the Division of Finance before partial rebates may be made;
18 . requires the Governor's Office of Economic Development to submit the total
19 amount of partial rebates required to be paid in a fiscal year to the governor for
20 inclusion in the governor's budget and to the Legislature; and
21 . makes technical changes.
22 Monies Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 None
26 Utah Code Sections Affected:
27 AMENDS:

28 63-38f-1304, as last amended by Laws of Utah 2006, Chapter 52
29 63-38f-1306, as renumbered and amended by Laws of Utah 2005, Chapter 148
30 63-38f-1307, as last amended by Laws of Utah 2006, Chapter 52
31 63-38f-1309, as last amended by Laws of Utah 2005, Chapter 272 and renumbered and
32 amended by Laws of Utah 2005, Chapter 148
33 63-38f-1705, as enacted by Laws of Utah 2005, Chapter 272
34
35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 63-38f-1304 is amended to read:
37 63-38f-1304. Development incentives.
38 (1) [The] (a) Subject to the limits provided in Subsections (1)(b) and (c), the office,
39 with advice from the board, may enter into agreements providing for partial rebates of new
40 state revenues generated by new commercial projects to companies or individuals that create
41 new economic growth within the development zone.
42 (b) The office may not enter into agreements with companies or individuals under
43 Subsection (1) that authorize partial rebates of new state revenues if the estimated partial
44 rebates based upon the agreements entered into in any fiscal year would require the state to:
45 (i) commit to pay more than $10,000,000 in estimated partial rebates based upon all of
46 the new agreements entered into during that fiscal year;
47 (ii) commit to pay more than $3,000,000 in estimated partial rebates to any one
48 company or individual in the fiscal year; or
49 (iii) commit to pay cumulative estimated partial rebates totaling more than
50 $150,000,000 in any fiscal year.
51 (c) The office shall include in the agreement notice to the company or individual that
52 partial rebates earned will be paid by the July 1 of the second year after the calendar year in
53 which the partial rebates were earned.
54 (2) In no event may the partial rebates be in excess of 50% of the new state revenues in
55 any given year.
56 (3) (a) The partial rebates may not exceed 30% of the new state revenues generated
57 over the life of a new commercial project.
58 (b) For purposes of this part, the life of a new commercial project is limited to 20

59 years.
60 (4) Partial rebates are subject to any other limitations adopted by board rule made in
61 accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
62 (5) Any agreement entered into by the office that violates this section is void.
63 Section 2. Section 63-38f-1306 is amended to read:
64 63-38f-1306. Payment procedure.
65 [Any payment of partial rebates of new state revenues shall be made in accordance with
66 procedures adopted by the office with the advice of the board, to include the following:]
67 (1) Within 60 days of the end of each calendar year, the office shall submit a list of
68 companies and individuals that might have qualified for a partial rebate to the State Tax
69 Commission.
70 (2) Within 90 days of the end of each calendar year, the State Tax Commission shall
71 submit to the office the amounts of taxes paid directly to the State Tax Commission by the
72 company or individual.
73 [(1) within] (3) Within 90 days of the end of each calendar year, [any] a company or
74 individual that has entered into an agreement with the office under this part shall provide the
75 office with documentation of the new state revenues it claims to have generated during that
76 calendar year[, the documentation to include] including:
77 (a) the types of taxes and corresponding amounts of taxes paid directly to the Utah
78 State Tax Commission[,]; and
79 (b) sales taxes paid to Utah vendors and suppliers that are indirectly paid to the Utah
80 State Tax Commission[;].
81 [(2) the] (4) The office shall:
82 (a) audit or review the documentation[, make a determination of] and determine the
83 amount of partial rebates earned under the agreement[,]; and [forward an office-approved
84 request for payment of that amount to the Division of Finance, together with information
85 regarding the name and address of the payee and any other information reasonably requested by
86 the office; and]
87 [(3) the Division of Finance shall pay a partial rebate from the Economic Incentive
88 Restricted Account created in Section 63-38f-1309 upon receipt of documentation and the
89 office-approved request from the office under Subsection (2).]

90 (b) submit the State Tax Commission information from Subsection (2) and the office's
91 calculation of the total amount of partial rebates required to be paid from the Economic
92 Incentive Restricted Account created in Section 63-38f-1309 to:
93 (i) the governor for inclusion in the governor's budget;
94 (ii) the chairs of the Legislature's Executive Appropriations Committee; and
95 (iii) the Office of the Legislative Fiscal Analyst.
96 Section 3. Section 63-38f-1307 is amended to read:
97 63-38f-1307. Office's authority.
98 (1) The office, with the advice of the board and within the limitations of this part, may,
99 subject to the limits established in Section 63-38f-1304 , determine:
100 (a) the structure and amount of any partial rebates offered under this part;
101 (b) the economic impacts and job creation necessary to qualify for the incentive; and
102 (c) the other terms and conditions of any agreement entered into under this part.
103 (2) In reviewing claims for partial rebates of new state revenues, the office may accept:
104 (a) as the amount of employee income taxes paid, the amount of employee income
105 taxes withheld and transmitted to the Utah State Tax Commission as evidenced by payroll
106 records rather than adjusting for the difference between taxes withheld and taxes actually paid
107 through filing by employees' annual income tax statements; and
108 (b) as the amount of company income taxes paid, the amount of corporate franchise
109 and income taxes estimated and transmitted to the Utah State Tax Commission as evidenced by
110 quarterly payment records rather than adjusting for the difference between estimated taxes paid
111 quarterly and taxes actually paid through the filing of the corporation's annual income tax
112 statement.
113 (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
114 board may make, amend, and repeal rules regarding the development zone and partial rebates
115 offered within it, provided the rules are consistent with state and federal law.
116 Section 4. Section 63-38f-1309 is amended to read:
117 63-38f-1309. Establishment of the Economic Incentive Restricted Account.
118 (1) There is created a restricted account in the General Fund known as the Economic
119 Incentive Restricted Account.
120 [(2) The account shall be used to make payments as required under Sections

121 63-38f-1306 and 63-38f-1705 .]
122 [(3)] (2) (a) The Division of Finance shall transfer from the General Fund into the
123 restricted account the amount estimated by the office from new state revenues needed to make
124 the partial rebates as allowed in Sections 63-38f-1306 and 63-38f-1705 .
125 (b) The amount transferred into the account shall be reduced by any unencumbered
126 balances in the account.
127 [(4) Not withstanding Subsections 51-5-3 (23)(b) and 63-38-9 (4)(c), after receiving a
128 request for payment, in accordance with Subsection 63-38f-1306 (2) or 63-38f-1705 (2),]
129 (3) (a) The Legislature may appropriate monies from the restricted account to the
130 Division of Finance to make the partial rebate payments owed under the legal agreements
131 entered into under Section 63-38f-1304 .
132 (b) As authorized in the legislative appropriation from the restricted account or from
133 monies appropriated to the division for that purpose from any other source, the Division of
134 Finance shall pay the partial rebates as allowed in Section 63-38f-1306 or 63-38f-1705 , from
135 the account.
136 [(5)] (4) (a) [Prior to] Before the beginning of each fiscal year, the office shall notify
137 the Governor's Office of Planning and Budget, the Office of Legislative Fiscal Analyst, and the
138 Division of Finance of:
139 (i) the estimated amount of new state revenues created from economic growth in the
140 development zones, the estimate detailed by the amounts from:
141 (A) sales tax;
142 (B) income tax; and
143 (C) corporate franchise and income tax; and
144 (ii) the estimated amount partial rebates projected to be paid in the upcoming fiscal
145 year, the estimates detailed by the amounts from:
146 (A) sales tax;
147 (B) income tax; and
148 (C) corporate franchise and income tax.
149 (b) The office shall update the estimates required by Subsections [(5)] (4)(a)(i) and (ii)
150 within 30 days of the signing of each new agreement entered into under this part or Title 63,
151 Chapter 38f, Part 17, Economic Development Incentives Act.

152 Section 5. Section 63-38f-1705 is amended to read:
153 63-38f-1705. Qualifications for rebates -- Payment procedure.
154 (1) The office shall set standards to qualify for partial rebates under this part, subject to
155 the following:
156 (a) the qualification criteria established in Subsections 63-38f-1305 (1), (2), (3), (4),
157 and (6); and
158 (b) only projects that include significant capital investment, the creation of high paying
159 jobs, or significant purchases from Utah vendors and providers, or any combination of these
160 three economic factors are eligible for partial rebates.
161 (2) A payment of partial rebates of new state revenues shall be made in accordance
162 with [procedures adopted by the office, with advice from the board, to include] the payment
163 procedures described in Section 63-38f-1306 as applied to partial rebates authorized under this
164 part.




Legislative Review Note
as of 1-28-08 11:04 AM

Office of Legislative Research and General Counsel