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First Substitute H.B. 152

Representative Jack A. Seitz proposes the following substitute bill:


             1     
OIL AND GAS SEVERANCE TAX - BOARD,

             2     
RESTRICTED ACCOUNT, AND USE OF

             3     
REVENUES

             4     
2002 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Jack A. Seitz

             7      Thomas V. Hatch
             8      Bradley T. JohnsonBrad King
Gordon E. SnowMax W. Young              9      This act modifies the Community and Economic Development Code and the Oil and Gas
             10      Severance Tax Act to provide definitions and to create within the Division of Community
             11      Development the Oil and Gas Severance Tax Board. The act provides procedures and
             12      requirements for the operation of the Oil and Gas Severance Tax Board and prescribes the
             13      powers and duties of the Oil and Gas Severance Tax Board. The act creates the Oil and Gas
             14      Severance Tax Restricted Account, specifies the revenues to be deposited into the Oil and
             15      Gas Severance Tax Restricted Account, and prescribes the purposes for which those
             16      revenues may be expended. The act makes technical changes.
             17      This act affects sections of Utah Code Annotated 1953 as follows:
             18      AMENDS:
             19          59-5-115, as last amended by Chapter 135, Laws of Utah 1996
             20      ENACTS:
             21          9-16-101, Utah Code Annotated 1953
             22          9-16-102, Utah Code Annotated 1953
             23          9-16-103, Utah Code Annotated 1953
             24          9-16-104, Utah Code Annotated 1953
             25          9-16-105, Utah Code Annotated 1953


             26          59-5-120, Utah Code Annotated 1953
             27      Be it enacted by the Legislature of the state of Utah:
             28          Section 1. Section 9-16-101 is enacted to read:
             29     
CHAPTER 16. OIL AND GAS SEVERANCE TAX BOARD ACT

             30          9-16-101. Title.
             31          This chapter is known as the "Oil and Gas Severance Tax Board Act."
             32          Section 2. Section 9-16-102 is enacted to read:
             33          9-16-102. Definitions.
             34          As used in this chapter:
             35          (1) "Board" means the Oil and Gas Severance Tax Board created in Section 9-16-103 .
             36          (2) "Division" means the Division of Community Development.
             37          (3) "Restricted account" means the Oil and Gas Severance Tax Restricted Account created
             38      in Section 59-5-120 .
             39          Section 3. Section 9-16-103 is enacted to read:
             40          9-16-103. Oil and Gas Severance Tax Board -- Creation -- Membership --
             41      Appointments -- Officers -- Meetings -- Compensation -- Funding.
             42          (1) There is created within the division the Oil and Gas Severance Tax Board.
             43          (2) The board shall consist of nine members who are appointed as follows:
             44          (a) the division shall forward to the governor one or more names submitted to the division
             45      by the governing body of each county within which oil or gas is produced; and
             46          (b) the governor shall appoint the members from the names forwarded by the division
             47      under Subsection (2)(a).
             48          (3) (a) Except as provided in Subsections (3)(b)(i) and (3)(c), each member of the board
             49      shall serve a four-year term.
             50          (b) If a vacancy occurs in the membership of the board, a member shall be appointed to
             51      fill the vacancy as follows:
             52          (i) notwithstanding Subsection (3)(a), if a vacancy occurs before the expiration of a
             53      member's term, a member shall be appointed to serve the unexpired term in accordance with
             54      Subsection (2); or
             55          (ii) except as provided in Subsection (3)(c), if a vacancy occurs as a result of the expiration
             56      of a member's term, a member shall be appointed to serve a four-year term in accordance with


             57      Subsection (2).
             58          (c) Notwithstanding Subsection (3)(a) or (3)(b)(ii), the governor shall in appointing
             59      members to the board, adjust the length of terms to ensure that the terms of the board members are
             60      staggered so that approximately half of the board is appointed every two years.
             61          (4) The board:
             62          (a) shall elect a chair of the board; and
             63          (b) may elect other officers as determined by the board.
             64          (5) (a) A majority of the members of the board constitute a quorum.
             65          (b) Action by a majority vote of a quorum of the board constitutes an action by the board.
             66          (6) The board shall:
             67          (a) hold meetings on dates established by the board; and
             68          (b) in holding a meeting, comply with the requirements of Title 52, Chapter 4, Open and
             69      Public Meetings.
             70          (7) Except as provided in Subsection (8):
             71          (a) a member of the board who is not a government employee may not receive
             72      compensation or benefits for the member's services, but may receive per diem and expenses
             73      incurred in the performance of the member's official duties at the rates established by the Division
             74      of Finance under Sections 63A-3-106 and 63A-3-107 ;
             75          (b) a member of the board who is a state government officer or employee who does not
             76      receive salary, per diem, or expenses from the member's agency for the member's service may
             77      receive per diem and expenses incurred in the performance of the member's official duties at the
             78      rates established by the Division of Finance under Sections 63A-3-106 and 63A-3-107 ;
             79          (c) a member of the board who is a local government officer or employee who does not
             80      receive salary, per diem, or expenses from the entity that the member represents for the member's
             81      service may receive per diem and expenses incurred in the performance of the member's official
             82      duties at the rates established by the Division of Finance under Sections 63A-3-106 and
             83      63A-3-107 ; and
             84          (d) a member of the board may decline to receive per diem and expenses for the member's
             85      services.
             86          (8) (a) Except as provided in Subsection (8)(b), the following amounts shall be paid from
             87      the restricted account:


             88          (i) per diem and expenses described in Subsection (7); and
             89          (ii) other expenses of the board.
             90          (b) Notwithstanding Subsection (8)(a):
             91          (i) the amounts described in Subsection (8)(a) may not be paid unless after paying the
             92      amounts the restricted account will have a balance of at least $10,000; and
             93          (ii) after the day on which the restricted account has a balance of $1,000,000 or more, the
             94      amounts described in Subsection (8)(a) paid from the restricted account may not exceed 2% of the
             95      deposits into the restricted account under Section 59-5-120 in a calendar year.
             96          Section 4. Section 9-16-104 is enacted to read:
             97          9-16-104. Powers and duties of the Oil and Gas Severance Tax Board.
             98          (1) The Oil and Gas Severance Tax Board shall:
             99          (a) in accordance with Section 9-16-105 , approve applications for grants from revenues
             100      appropriated by the Legislature from the Oil and Gas Severance Tax Restricted Account to:
             101          (i) a county within which oil or gas is produced;
             101a      S (ii) ONE OR MORE OF THE FOLLOWING LOCATED IN A COUNTY WITHIN WHICH OIL OR GAS IS
             101b      PRODUCED:
             101c          (A) A SCHOOL DISTRICT; OR
             101d          (B) AN INSTITUTION OF HIGHER EDUCATION DESCRIBED IN SECTION 53B-2-101;
             102           [ (ii) ] (iii) s an Indian tribe, if oil or gas is produced within:
             102a           S [ h (b) ESTABLISH OR APPROVE ALL RULES TO ADMINISTER THIS ACT: h] s
             103          (A) a property interest that is held in trust by the United States for the tribe within the state
             104      or a member of that tribe; or
             105          (B) property identified in Pub. L. No. 440, 62 Stat. 72 (1948); or
             106           S [ (iii) ] (iv) s a combination of Subsections (1)(a)(i) S [ and (ii) ] THROUGH (iii) s ;
             106a      S (b) ESTABLISH OR APPROVE ALL RULES TO ADMINISTER THIS ACT;
             107           [ (b) ] (c) s subject to Subsection (2) and in accordance with Section 9-16-105 , establish
             108      procedures for applying for a grant including establishing eligibility criteria;
             109           S [ (c) ] (d) s subject to Subsection (2):
             110          (i) prioritize the projects or other activities for which a grant is applied for in accordance
             111      with criteria for prioritizing those projects or activities; and
             112          (ii) establish criteria for prioritizing the projects or activities described in Subsection
             113      S [ (1)(c)(i) ] (1)(d)(i) s ; and
             114           S [ (d) ] (e) s coordinate projects or other activities for which a grant is applied for.
             115          (2) The eligibility criteria described in Subsection S [ (1)(b) ] (1)(c) s and the criteria


             115a      for prioritizing
             116      projects or activities described in Subsection S [ (1)(c) ] (1)(d) s that are established by the board:
             117          (a) shall include the following criteria:
             118          (i) the unemployment rates:


             119          (A) in each county described in Subsection (1)(a)(i); or
             120          (B) for each Indian tribe described in Subsection S [ (1)(a)(ii) ] (1)(a)(iii) s ;
             121          (ii) the per capita income:
             122          (A) in each county described in Subsection (1)(a)(i); or
             123          (B) for each Indian tribe described in Subsection S [ (1)(a)(ii) ] (1)(a)(iii) s ;
             124          (iii) for each county described in Subsection (1)(a)(i), for the calendar year immediately
             125      preceding the current calendar year, the taxable value of property subject to taxation on the basis
             126      of the property's value in accordance with:
             127          (A) Title 59, Chapter 2, Property Tax Act;
             128          (B) Title 59, Chapter 3, Tax Equivalent Property Act; or
             129          (C) Title 59, Chapter 4, Privilege Tax; and
             130          (iv) the amount of oil or gas produced within each:
             131          (A) county described in Subsection (1)(a)(i); or
             132          (B) property described in Subsection S [ (1)(a)(ii)(A) ] (1)(a)(iii)(A) s or (B); and
             133          (b) may include other criteria as determined by the board.
             134          (3) The board may qualify for, accept, or administer grants, gifts, or other funds from the
             135      federal government or from other sources, public or private.
             136          Section 5. Section 9-16-105 is enacted to read:
             137          9-16-105. Grants from Oil and Gas Severance Tax Restricted Account -- Application
             138      procedures -- Oil and Gas Severance Tax Board review and approval procedures -- Division
             139      duties regarding grants.
             140          (1) (a) A county S , SCHOOL DISTRICT, INSTITUTION OF HIGHER EDUCATION, s or an
             140a      Indian tribe described in Subsection 9-16-104 (1)(a) wishing to
             141      receive a grant from revenues appropriated by the Legislature from the Oil and Gas Severance Tax
             142      Restricted Account shall apply to the board.
             143          (b) A grant application shall contain the information required by the board.
             144          (c) The board shall review each grant application before approving the grant for which the
             145      application is submitted.
             146          (d) The board may approve a grant application subject to the applicant's compliance with
             147      certain conditions established by the board.
             148          (2) The division shall distribute grant monies:
             149          (a) if the grant is approved by the board; and


             150          (b) in accordance with the instructions of the board, except that the board may not instruct
             151      that monies be distributed in a manner:
             152          (i) inconsistent with Section 9-16-104 or this section; or
             153          (ii) in violation of a rule or procedure of the division.
             154          (3) The division shall report annually to the Workforce Services and Economic
             155      Development Interim Committee regarding:
             156          (a) the number and type of grants made in accordance with Section 9-16-104 and this
             157      section; and
             158          (b) a list of recipients of a grant made in accordance with Section 9-16-104 and this
             159      section.
             160          Section 6. Section 59-5-115 is amended to read:
             161           59-5-115. Disposition of taxes collected -- Credit to General Fund.
             162          [All] (1) Except as provided in Subsection (2), all taxes imposed and collected under
             163      Section 59-5-102 shall be:
             164          (a) paid to the commission[, and];
             165          (b) promptly remitted by the commission to the state treasurer[,]; and [except those taxes
             166      otherwise allocated under Section 59-5-116 or 59-5-119 ,]
             167          (c) credited to the General Fund.
             168          (2) Notwithstanding Subsection (1):
             169          (a) the amounts specified in Section 59-5-116 shall be deposited into the Uintah Basin
             170      Revitalization Fund in accordance with Section 59-5-116 ;
             171          (b) the amounts specified in Section 59-5-119 shall be deposited into the Navajo
             172      Revitalization Fund in accordance with Section 59-5-119 ; and
             173          (c) the amounts specified in Section 59-5-120 shall be deposited into the Oil and Gas
             174      Severance Tax Restricted Account in accordance with Section 59-5-120 .
             175          Section 7. Section 59-5-120 is enacted to read:
             176          59-5-120. Oil and Gas Severance Tax Restricted Account created -- Revenues to be
             177      deposited into the Oil and Gas Severance Tax Restricted Account -- Expenditure of revenues
             178      deposited in the Oil and Gas Severance Restricted Account -- Interest.
             179          (1) As used in this section:
             180          (a) "Base amount" means:


             181          (i) for the calendar year beginning on January 1, 2003, $34,000,000; S OR s
             182          (ii) for S [ the ] s calendar S [ year ] YEARS s beginning on S OR AFTER s January 1, 2004,
             182a      $32,000,000 S [ ; or ] . s
             183           S [ (iii) for calendar years beginning on or after January 1, 2005, $25,000,000. ] s
             184          (b) (i) Except as provided in Subsection (1)(b)(ii), "prior year oil and gas severance tax
             185      collections" means the difference between:
             186          (A) the tax revenues collected under this part for the calendar year immediately preceding
             187      the current calendar year; and
             188          (B) for the calendar year immediately preceding the current calendar year, the sum of the
             189      amounts deposited into the:
             190          (I) Uintah Basin Revitalization Fund in accordance with Section 59-5-116 ; and
             191          (II) Navajo Revitalization Fund in accordance with Section 59-5-119 .
             192          (ii) Notwithstanding Subsection (1)(b)(i), for the calendar year immediately preceding the
             193      current calendar year, the following adjustments made on or after August 1 may not be considered
             194      in calculating the amount to be deposited into the Oil and Gas Severance Tax Restricted Account
             195      under this section:
             196          (A) an adjustment as a result of a taxpayer filing an amended tax return;
             197          (B) an adjustment as a result of a refund of a tax imposed by this part; or
             198          (C) an adjustment as a result of an audit by the commission conducted in accordance with
             199      Section 59-5-107 .
             200          (2) There is created within the General Fund a restricted account known as the "Oil and
             201      Gas Severance Tax Restricted Account."
             202          (3) The Oil and Gas Severance Tax Restricted Account shall be funded from:
             203          (a) amounts deposited by the commission in accordance with Subsection (5);
             204          (b) amounts received by the Oil and Gas Severance Tax Board in accordance with
             205      Subsection 9-16-104 (3); and
             206          (c) the interest described in Subsection (4).
             207          (4) Interest earned on the Oil and Gas Severance Tax Restricted Account shall be
             208      deposited into the Oil and Gas Severance Tax Restricted Account.
             209          (5) (a) Except as provided in Subsection (5)(b), for a calendar year beginning on or after
             210      January 1, 2003, the commission shall on or before August 1 of that calendar year deposit into the
             211      Oil and Gas Severance Tax Restricted Account any amounts by which the prior year oil and gas


             212      severance tax collections exceed the base amount for that calendar year.
             213          (b) Notwithstanding Subsection (5)(a), the commission may not deposit into the Oil and
             214      Gas Severance Tax Restricted Account in any calendar year an amount that exceeds $8,000,000.
             215          (6) The revenues deposited into the Oil and Gas Severance Tax Restricted Account shall
             216      be expended:
             217          (a) only to the extent appropriated by the Legislature; and
             218          (b) as provided in Sections 9-16-104 and 9-16-105 .


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