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H.B. 323 Enrolled

             1     

EDUCATION FUND CONFORMING

             2     
AMENDMENTS

             3     
2007 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Ron Bigelow

             6     
Senate Sponsor: Lyle W. Hillyard

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies sections of the Utah Code to reflect changes necessary because of the
             11      creation of the Education Fund.
             12      Highlighted Provisions:
             13          This bill:
             14          .    modifies sections to ensure the appropriate deposits and transfers into, and
             15      appropriations and transfers from, the Education Fund; and
             16          .    adjusts the definitions in the State Appropriations and Tax Limitation Act to ensure
             17      that the exemption for public education expenditures is preserved.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          53A-16-101, as last amended by Chapter 166, Laws of Utah 2005
             25          59-7-532, as renumbered and amended by Chapter 169, Laws of Utah 1993
             26          59-7-614, as last amended by Chapter 223, Laws of Utah 2006
             27          59-7-614.1, as enacted by Chapter 312, Laws of Utah 2003
             28          59-10-544, as renumbered and amended by Chapter 2, Laws of Utah 1987
             29          59-10-1005, as last amended by Chapter 2, Laws of Utah 2006, Fourth Special Session


             30          59-10-1014, as renumbered and amended by Chapter 223, Laws of Utah 2006
             31          59-10-1105, as renumbered and amended by Chapter 223, Laws of Utah 2006
             32          63-38-2.6, as enacted by Chapter 88, Laws of Utah 2003
             33          63-38-9, as last amended by Chapter 16, Laws of Utah 2003
             34          63-38c-103, as last amended by Chapter 1, Laws of Utah 2005, First Special Session
             35     
             36      Be it enacted by the Legislature of the state of Utah:
             37          Section 1. Section 53A-16-101 is amended to read:
             38           53A-16-101. Uniform School Fund -- Contents -- Interest and Dividends Account.
             39          (1) The Uniform School Fund established by Utah Constitution, Article X, Section 5,
             40      consists of:
             41          (a) interest and dividends derived from the investment of monies in the permanent
             42      State School Fund established by Utah Constitution, Article X, Section 5;
             43          (b) money transferred to the fund pursuant to Title 67, Chapter 4a, Unclaimed Property
             44      Act;
             45          (c) revenue from the sale of forfeited property as provided by [Title 24, Chapter 1,
             46      Utah Uniform Forfeiture Procedures Act] Sections 76-10-1107 , 76-10-1108 , and 76-10-1603.5 ;
             47      and
             48          (d) all other constitutional or legislative allocations to the fund, including revenues
             49      received [under Utah Constitution, Article XIII, Section 5, from taxes on income or intangible
             50      property, except for those income tax revenues appropriated to the state's higher education
             51      system] by donation.
             52          (2) (a) There is created within the Uniform School Fund a restricted account known as
             53      the Interest and Dividends Account.
             54          (b) The Interest and Dividends Account consists of:
             55          (i) interest and dividends derived from the investment of monies in the permanent State
             56      School Fund referred to in Subsection (1)(a); and
             57          (ii) interest on account monies.


             58          (3) (a) Upon appropriation by the Legislature, monies from the Interest and Dividends
             59      Account shall be used for the School LAND Trust Program as provided in Section
             60      53A-16-101.5 .
             61          (b) The Legislature may appropriate any remaining balance for the support of the
             62      public education system.
             63          Section 2. Section 59-7-532 is amended to read:
             64           59-7-532. Revenue received by commission -- Deposit with state treasurer --
             65      Distribution or crediting to Education Fund -- Refund claim payments.
             66          (1) All revenue collected or received by the commission under this chapter shall be
             67      deposited daily with the state treasurer. Such revenue, subject to the refund provisions of this
             68      section, shall be periodically distributed or credited to the [Uniform School] Education Fund.
             69          (2) The commission shall from time to time certify to the state auditor the amount of
             70      any refund authorized by it, the amount of interest computed on it under the provisions of
             71      Section 59-7-533 , from whom the tax to be refunded was collected, or by whom it was paid,
             72      and such refund claims shall be paid in order out of the funds first accruing to the [Uniform
             73      School] Education Fund from the provisions of this section.
             74          Section 3. Section 59-7-614 is amended to read:
             75           59-7-614. Renewable energy systems tax credit -- Definitions -- Limitations --
             76      State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
             77      authority -- Reimbursement of Education Fund.
             78          (1) As used in this section:
             79          (a) "Active solar system":
             80          (i) means a system of equipment capable of collecting and converting incident solar
             81      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             82      by a separate apparatus to storage or to the point of use; and
             83          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             84      energy generation.
             85          (b) "Biomass system" means any system of apparatus and equipment capable of


             86      converting organic plant, wood, or waste products into electrical and thermal energy and
             87      transferring these forms of energy by a separate apparatus to the point of use or storage.
             88          (c) "Business entity" means any sole proprietorship, estate, trust, partnership,
             89      association, corporation, cooperative, or other entity under which business is conducted or
             90      transacted.
             91          (d) "Commercial energy system" means any active solar, passive solar, wind,
             92      hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
             93      enterprise.
             94          (e) "Commercial enterprise" means a business entity whose purpose is to produce
             95      electrical, mechanical, or thermal energy for sale from a commercial energy system.
             96          (f) (i) "Commercial unit" means any building or structure which a business entity uses
             97      to transact its business except as provided in Subsection (1)(f)(ii); and
             98          (ii) (A) in the case of an active solar system used for agricultural water pumping or a
             99      wind system, each individual energy generating device shall be a commercial unit; and
             100          (B) if an energy system is the building or structure which a business entity uses to
             101      transact its business, a commercial unit is the complete energy system itself.
             102          (g) "Hydroenergy system" means a system of apparatus and equipment capable of
             103      intercepting and converting kinetic water energy into electrical or mechanical energy and
             104      transferring this form of energy by separate apparatus to the point of use or storage.
             105          (h) "Individual taxpayer" means any person who is a taxpayer as defined in Section
             106      59-10-103 and an individual as defined in Section 59-10-103 .
             107          (i) "Passive solar system":
             108          (i) means a direct thermal system which utilizes the structure of a building and its
             109      operable components to provide for collection, storage, and distribution of heating or cooling
             110      during the appropriate times of the year by utilizing the climate resources available at the site;
             111      and
             112          (ii) includes those portions and components of a building that are expressly designed
             113      and required for the collection, storage, and distribution of solar energy.


             114          (j) "Residential energy system" means any active solar, passive solar, wind, or
             115      hydroenergy system used to supply energy to or for any residential unit.
             116          (k) "Residential unit" means any house, condominium, apartment, or similar dwelling
             117      unit which serves as a dwelling for a person, group of persons, or a family but does not include
             118      property subject to a fee under:
             119          (i) Section 59-2-404 ;
             120          (ii) Section 59-2-405 ;
             121          (iii) Section 59-2-405.1 ;
             122          (iv) Section 59-2-405.2 ; or
             123          (v) Section 59-2-405.3 .
             124          (l) "Utah Geological Survey" means the Utah Geological Survey established in Section
             125      63-73-5 .
             126          (m) "Wind system" means a system of apparatus and equipment capable of intercepting
             127      and converting wind energy into mechanical or electrical energy and transferring these forms of
             128      energy by a separate apparatus to the point of use or storage.
             129          (2) (a) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             130      before December 31, 2006, a business entity that purchases and completes or participates in the
             131      financing of a residential energy system to supply all or part of the energy required for a
             132      residential unit owned or used by the business entity and situated in Utah is entitled to a tax
             133      credit as provided in this Subsection (2)(a).
             134          (ii) (A) A business entity is entitled to a tax credit equal to 25% of the costs of a
             135      residential energy system installed with respect to each residential unit it owns or uses,
             136      including installation costs, against any tax due under this chapter for the taxable year in which
             137      the energy system is completed and placed in service.
             138          (B) The total amount of the credit under this Subsection (2)(a) may not exceed $2,000
             139      per residential unit.
             140          (C) The credit under this Subsection (2)(a) is allowed for any residential energy system
             141      completed and placed in service on or after January 1, 2001, but on or before December 31,


             142      2006.
             143          (iii) If a business entity sells a residential unit to an individual taxpayer prior to making
             144      a claim for the tax credit under this Subsection (2)(a), the business entity may:
             145          (A) assign its right to this tax credit to the individual taxpayer; and
             146          (B) if the business entity assigns its right to the tax credit to an individual taxpayer
             147      under Subsection (2)(a)(iii)(A), the individual taxpayer may claim the tax credit as if the
             148      individual taxpayer had completed or participated in the costs of the residential energy system
             149      under Section 59-10-1014 .
             150          (b) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             151      before December 31, 2006, a business entity that purchases or participates in the financing of a
             152      commercial energy system is entitled to a tax credit as provided in this Subsection (2)(b) if:
             153          (A) the commercial energy system supplies all or part of the energy required by
             154      commercial units owned or used by the business entity; or
             155          (B) the business entity sells all or part of the energy produced by the commercial
             156      energy system as a commercial enterprise.
             157          (ii) (A) A business entity is entitled to a tax credit equal to 10% of the costs of any
             158      commercial energy system installed, including installation costs, against any tax due under this
             159      chapter for the taxable year in which the commercial energy system is completed and placed in
             160      service.
             161          (B) The total amount of the credit under this Subsection (2)(b) may not exceed $50,000
             162      per commercial unit.
             163          (C) The credit under this Subsection (2)(b) is allowed for any commercial energy
             164      system completed and placed in service on or after January 1, 2001, but on or before December
             165      31, 2006.
             166          (iii) A business entity that leases a commercial energy system installed on a
             167      commercial unit is eligible for the tax credit under this Subsection (2)(b) if the lessee can
             168      confirm that the lessor irrevocably elects not to claim the credit.
             169          (iv) Only the principal recovery portion of the lease payments, which is the cost


             170      incurred by a business entity in acquiring a commercial energy system, excluding interest
             171      charges and maintenance expenses, is eligible for the tax credit under this Subsection (2)(b).
             172          (v) A business entity that leases a commercial energy system is eligible to use the tax
             173      credit under this Subsection (2)(b) for a period no greater than seven years from the initiation
             174      of the lease.
             175          (c) (i) A tax credit under this section may be claimed for the taxable year in which the
             176      energy system is completed and placed in service.
             177          (ii) Additional energy systems or parts of energy systems may be claimed for
             178      subsequent years.
             179          (iii) If the amount of a tax credit under this section exceeds a business entity's tax
             180      liability under this chapter for a taxable year, the amount of the credit exceeding the liability
             181      may be carried over for a period which does not exceed the next four taxable years.
             182          (3) (a) The tax credits provided for under Subsection (2) are in addition to any tax
             183      credits provided under the laws or rules and regulations of the United States.
             184          (b) (i) The Utah Geological Survey may set standards for residential and commercial
             185      energy systems that cover the safety, reliability, efficiency, leasing, and technical feasibility of
             186      the systems to ensure that the systems eligible for the tax credit use the state's renewable and
             187      nonrenewable energy resources in an appropriate and economic manner.
             188          (ii) A tax credit may not be taken under Subsection (2) until the Utah Geological
             189      Survey has certified that the energy system has been completely installed and is a viable system
             190      for saving or production of energy from renewable resources.
             191          (c) The Utah Geological Survey and the commission are authorized to promulgate rules
             192      in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, which are
             193      necessary to implement this section.
             194          (d) The [Uniform School] Education Fund shall be reimbursed by transfers from the
             195      General Fund for any credits taken under this section.
             196          Section 4. Section 59-7-614.1 is amended to read:
             197           59-7-614.1. Refundable tax credit for hand tools used in farming operations --


             198      Procedures for refund -- Transfers from General Fund to Uniform School Fund --
             199      Rulemaking authority.
             200          (1) For taxable years beginning on or after January 1, 2004, a taxpayer may claim a
             201      refundable tax credit:
             202          (a) as provided in this section;
             203          (b) against taxes otherwise due under this chapter; and
             204          (c) in an amount equal to the amount of tax the taxpayer pays:
             205          (i) on a purchase of a hand tool:
             206          (A) if the purchase is made on or after July 1, 2004;
             207          (B) if the hand tool is used or consumed primarily and directly in a farming operation
             208      in the state; and
             209          (C) if the unit purchase price of the hand tool is more than $250; and
             210          (ii) under Chapter 12, Sales and Use Tax Act, on the purchase described in Subsection
             211      (1)(c)(i).
             212          (2) A taxpayer:
             213          (a) shall retain the following to establish the amount of tax the resident or nonresident
             214      individual paid under Chapter 12, Sales and Use Tax Act, on the purchase described in
             215      Subsection (1)(c)(i):
             216          (i) a receipt;
             217          (ii) an invoice; or
             218          (iii) a document similar to a document described in Subsection (2)(a)(i) or (ii); and
             219          (b) may not carry forward or carry back a tax credit under this section.
             220          (3) (a) In accordance with any rules prescribed by the commission under Subsection
             221      (3)(b), the commission shall:
             222          (i) make a refund to a taxpayer that claims a tax credit under this section if the amount
             223      of the tax credit exceeds the taxpayer's tax liability under this chapter; and
             224          (ii) transfer at least annually from the General Fund into the [Uniform School]
             225      Education Fund an amount equal to the amount of tax credit claimed under this section.


             226          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             227      commission may make rules providing procedures for making:
             228          (i) a refund to a taxpayer as required by Subsection (3)(a)(i); or
             229          (ii) transfers from the General Fund into the [Uniform School] Education Fund as
             230      required by Subsection (3)(a)(ii).
             231          Section 5. Section 59-10-544 is amended to read:
             232           59-10-544. General powers and duties of the commission.
             233          (1) The commission shall administer and enforce the tax herein imposed for which
             234      purpose it may divide the state into districts in each of which a branch office of the commission
             235      may be maintained. A county may not be divided in forming a district.
             236          (2) The commission may designate agents for the purpose of collecting income taxes
             237      and shall require from each of them an adequate bond.
             238          (3) The commission, for the purpose of ascertaining the correctness of any return or for
             239      the purpose of making an estimate of taxable income of any person where information has been
             240      obtained, may examine or cause to have examined, by any agent or representative designated
             241      by it for that purpose, any books, papers, records, or memoranda bearing upon the matters
             242      required to be included in the return, and may require the attendance of the person rendering
             243      the return or any officer or employee of such person, or the attendance of any other person
             244      having knowledge in the premises, and may take testimony and require proof material for its
             245      information.
             246          (4) All revenue collected or received by the commission under this chapter shall be
             247      deposited daily with the state treasurer. The balance of such revenue, subject to the provisions
             248      of Sections 59-10-529 and 59-10-531 (relating to refunds), shall be periodically distributed and
             249      credited to the [Uniform School] Education Fund. Refunds shall be made by the commission,
             250      and if not claimed within two years from the date of issuance shall revert to the state to be
             251      credited to the [Uniform School] Education Fund, and no further claims may be made upon the
             252      commission for the amounts of such refunds.
             253          Section 6. Section 59-10-1005 is amended to read:


             254           59-10-1005. Tax credit for at-home parent.
             255          (1) As used in this section:
             256          (a) "At-home parent" means a parent:
             257          (i) who provides full-time care at the parent's residence for one or more of the parent's
             258      own qualifying children;
             259          (ii) who claims the qualifying child as a dependent on the parent's individual income
             260      tax return for the taxable year for which the parent claims the credit; and
             261          (iii) if the sum of the following amounts are $3,000 or less for the taxable year for
             262      which the parent claims the credit:
             263          (A) the total wages, tips, and other compensation listed on all of the parent's federal
             264      Forms W-2; and
             265          (B) the gross income listed on the parent's federal Form 1040 Schedule C, Profit or
             266      Loss From Business.
             267          (b) "Parent" means an individual who:
             268          (i) is the biological mother or father of a qualifying child;
             269          (ii) is the stepfather or stepmother of a qualifying child;
             270          (iii) (A) legally adopts a qualifying child; or
             271          (B) has a qualifying child placed in the individual's home:
             272          (I) by a child placing agency as defined in Section 62A-4a-601 ; and
             273          (II) for the purpose of legally adopting the child;
             274          (iv) is a foster parent of a qualifying child; or
             275          (v) is a legal guardian of a qualifying child.
             276          (c) "Qualifying child" means a child who is no more than 12 months of age on the last
             277      day of the taxable year for which the tax credit is claimed.
             278          (2) For taxable years beginning on or after January 1, 2000, a claimant may claim on
             279      the claimant's individual income tax return a nonrefundable tax credit of $100 for each
             280      qualifying child if:
             281          (a) the claimant or another claimant filing a joint individual income tax return with the


             282      claimant is an at-home parent; and
             283          (b) the adjusted gross income of all of the claimants filing the individual income tax
             284      return is less than or equal to $50,000.
             285          (3) A claimant may not carry forward or carry back a tax credit authorized by this
             286      section.
             287          (4) It is the intent of the Legislature that for fiscal years beginning on or after fiscal
             288      year 2000-01, the Legislature appropriate from the General Fund a sufficient amount to replace
             289      [Uniform School] Education Fund revenues expended to provide for the tax credit under this
             290      section.
             291          Section 7. Section 59-10-1014 is amended to read:
             292           59-10-1014. Renewable energy systems tax credit -- Definitions -- Limitations --
             293      State tax credit in addition to allowable federal credits -- Certification -- Rulemaking
             294      authority -- Reimbursement of Education Fund.
             295          (1) As used in this part:
             296          (a) "Active solar system":
             297          (i) means a system of equipment capable of collecting and converting incident solar
             298      radiation into thermal, mechanical, or electrical energy, and transferring these forms of energy
             299      by a separate apparatus to storage or to the point of use; and
             300          (ii) includes water heating, space heating or cooling, and electrical or mechanical
             301      energy generation.
             302          (b) "Biomass system" means any system of apparatus and equipment capable of
             303      converting organic plant, wood, or waste products into electrical and thermal energy and
             304      transferring these forms of energy by a separate apparatus to the point of use or storage.
             305          (c) "Business entity" means any entity under which business is conducted or transacted.
             306          (d) "Commercial energy system" means any active solar, passive solar, wind,
             307      hydroenergy, or biomass system used to supply energy to a commercial unit or as a commercial
             308      enterprise.
             309          (e) "Commercial enterprise" means a business entity whose purpose is to produce


             310      electrical, mechanical, or thermal energy for sale from a commercial energy system.
             311          (f) (i) "Commercial unit" means any building or structure which a business entity uses
             312      to transact its business, except as provided in Subsection (1)(f)(ii); and
             313          (ii) (A) in the case of an active solar system used for agricultural water pumping or a
             314      wind system, each individual energy generating device shall be a commercial unit; and
             315          (B) if an energy system is the building or structure which a business entity uses to
             316      transact its business, a commercial unit is the complete energy system itself.
             317          (g) "Hydroenergy system" means a system of apparatus and equipment capable of
             318      intercepting and converting kinetic water energy into electrical or mechanical energy and
             319      transferring this form of energy by separate apparatus to the point of use or storage.
             320          (h) "Passive solar system":
             321          (i) means a direct thermal system which utilizes the structure of a building and its
             322      operable components to provide for collection, storage, and distribution of heating or cooling
             323      during the appropriate times of the year by utilizing the climate resources available at the site;
             324      and
             325          (ii) includes those portions and components of a building that are expressly designed
             326      and required for the collection, storage, and distribution of solar energy.
             327          (i) "Residential energy system" means any active solar, passive solar, wind, or
             328      hydroenergy system used to supply energy to or for any residential unit.
             329          (j) "Residential unit" means any house, condominium, apartment, or similar dwelling
             330      unit which serves as a dwelling for a person, group of persons, or a family but does not include
             331      property subject to a fee under:
             332          (i) Section 59-2-404 ;
             333          (ii) Section 59-2-405 ;
             334          (iii) Section 59-2-405.1 ;
             335          (iv) Section 59-2-405.2 ; or
             336          (v) Section 59-2-405.3 .
             337          (k) "Utah Geological Survey" means the Utah Geological Survey established in Section


             338      63-73-5 .
             339          (l) "Wind system" means a system of apparatus and equipment capable of intercepting
             340      and converting wind energy into mechanical or electrical energy and transferring these forms of
             341      energy by a separate apparatus to the point of use or storage.
             342          (2) For taxable years beginning on or after January 1, 2001, but beginning on or before
             343      December 31, 2006, a claimant, estate, or trust may claim a nonrefundable tax credit as
             344      provided in this section if:
             345          (a) a claimant, estate, or trust that is not a business entity purchases and completes or
             346      participates in the financing of a residential energy system to supply all or part of the energy for
             347      the claimant's, estate's, or trust's residential unit in the state; or
             348          (b) (i) a claimant, estate, or trust that is a business entity sells a residential unit to
             349      another claimant, estate, or trust that is not a business entity prior to making a claim for a tax
             350      credit under Subsection (6) or Section 59-7-614 ; and
             351          (ii) the claimant, estate, or trust that is a business entity assigns its right to the tax credit
             352      to the claimant, estate, or trust that is not a business entity as provided in Subsection (6)(c) or
             353      Subsection 59-7-614 (2)(a)(iii).
             354          (3) (a) The tax credit described in Subsection (2) is equal to 25% of the costs of the
             355      energy system, including installation costs, against any income tax liability of the claimant,
             356      estate, or trust under this chapter for the taxable year in which the residential energy system is
             357      completed and placed in service.
             358          (b) The total amount of the tax credit under this section may not exceed $2,000 per
             359      residential unit.
             360          (c) The tax credit under this section is allowed for any residential energy system
             361      completed and placed in service on or after January 1, 2001, but on or before December 31,
             362      2006.
             363          (4) (a) The tax credit provided for in this section shall be claimed in the return for the
             364      taxable year in which the energy system is completed and placed in service.
             365          (b) Additional residential energy systems or parts of residential energy systems may be


             366      similarly claimed in returns for subsequent taxable years as long as the total amount claimed
             367      does not exceed $2,000 per residential unit.
             368          (c) If the amount of the tax credit under this section exceeds the income tax liability of
             369      the claimant, estate, or trust claiming the tax credit under this section for that taxable year, then
             370      the amount not used may be carried over for a period which does not exceed the next four
             371      taxable years.
             372          (5) (a) A claimant, estate, or trust that is not a business entity that leases a residential
             373      energy system installed on a residential unit is eligible for the residential energy tax credits if
             374      that claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax
             375      credit.
             376          (b) Only the principal recovery portion of the lease payments, which is the cost
             377      incurred by the claimant, estate, or trust in acquiring the residential energy system excluding
             378      interest charges and maintenance expenses, is eligible for the tax credits.
             379          (c) A claimant, estate, or trust described in this Subsection (5) may use the tax credits
             380      for a period that does not exceed seven years from the initiation of the lease.
             381          (6) (a) A claimant, estate, or trust that is a business entity that purchases and completes
             382      or participates in the financing of a residential energy system to supply all or part of the energy
             383      required for a residential unit owned or used by the claimant, estate, or trust that is a business
             384      entity and situated in Utah is entitled to a nonrefundable tax credit as provided in this
             385      Subsection (6).
             386          (b) (i) For taxable years beginning on or after January 1, 2001, but beginning on or
             387      before December 31, 2006, a claimant, estate, or trust that is a business entity is entitled to a
             388      tax credit equal to 25% of the costs of a residential energy system installed with respect to each
             389      residential unit it owns or uses, including installation costs, against any tax due under this
             390      chapter for the taxable year in which the energy system is completed and placed in service.
             391          (ii) The total amount of the tax credit under this Subsection (6) may not exceed $2,000
             392      per residential unit.
             393          (iii) The tax credit under this Subsection (6) is allowed for any residential energy


             394      system completed and placed in service on or after January 1, 2001, but on or before December
             395      31, 2006.
             396          (c) If a claimant, estate, or trust that is a business entity sells a residential unit to a
             397      claimant, estate, or trust that is not a business entity prior to making a claim for the tax credit
             398      under this Subsection (6), the claimant, estate, or trust that is a business entity may:
             399          (i) assign its right to this tax credit to the claimant, estate, or trust that is not a business
             400      entity; and
             401          (ii) if the claimant, estate, or trust that is a business entity assigns its right to the tax
             402      credit to a claimant, estate, or trust that is not a business entity under Subsection (6)(c)(i), the
             403      claimant, estate, or trust that is not a business entity may claim the tax credit as if that claimant,
             404      estate, or trust that is not a business entity had completed or participated in the costs of the
             405      residential energy system under this section.
             406          (7) (a) A claimant, estate, or trust that is a business entity that purchases or participates
             407      in the financing of a commercial energy system is entitled to a nonrefundable tax credit as
             408      provided in this Subsection (7) if:
             409          (i) the commercial energy system supplies all or part of the energy required by
             410      commercial units owned or used by the claimant, estate, or trust that is a business entity; or
             411          (ii) the claimant, estate, or trust that is a business entity sells all or part of the energy
             412      produced by the commercial energy system as a commercial enterprise.
             413          (b) (i) A claimant, estate, or trust that is a business entity is entitled to a tax credit equal
             414      to 10% of the costs of any commercial energy system installed, including installation costs,
             415      against any tax due under this chapter for the taxable year in which the commercial energy
             416      system is completed and placed in service.
             417          (ii) The total amount of the tax credit under this Subsection (7) may not exceed
             418      $50,000 per commercial unit.
             419          (iii) The tax credit under this Subsection (7) is allowed for any commercial energy
             420      system completed and placed in service on or after January 1, 2001, but on or before December
             421      31, 2006.


             422          (c) A claimant, estate, or trust that is a business entity that leases a commercial energy
             423      system installed on a commercial unit is eligible for the tax credit under this Subsection (7) if
             424      the claimant, estate, or trust confirms that the lessor irrevocably elects not to claim the tax
             425      credit.
             426          (d) Only the principal recovery portion of the lease payments, which is the cost
             427      incurred by a claimant, estate, or trust that is not a business entity in acquiring a commercial
             428      energy system, excluding interest charges and maintenance expenses, is eligible for the tax
             429      credit under this Subsection (7).
             430          (e) A claimant, estate, or trust that is a business entity that leases a commercial energy
             431      system is eligible to use the tax credit under this Subsection (7) for a period that does not
             432      exceed seven years from the initiation of the lease.
             433          (8) (a) A tax credit under this section may be claimed for the taxable year in which the
             434      energy system is completed and placed in service.
             435          (b) Additional energy systems or parts of energy systems may be claimed for
             436      subsequent years.
             437          (c) If the amount of a tax credit under this section exceeds the tax liability of the
             438      claimant, estate, or trust claiming the tax credit under this section for a taxable year, the amount
             439      of the tax credit exceeding the tax liability may be carried over for a period which does not
             440      exceed the next four taxable years.
             441          (9) The tax credits provided for under this section are in addition to any tax credits
             442      provided under the laws or rules and regulations of the United States.
             443          (10) (a) The Utah Geological Survey may set standards for residential and commercial
             444      energy systems that cover the safety, reliability, efficiency, leasing, and technical feasibility of
             445      the systems to ensure that the systems eligible for the tax credit use the state's renewable and
             446      nonrenewable energy resources in an appropriate and economic manner.
             447          (b) A tax credit may not be taken under this section until the Utah Geological Survey
             448      has certified that the energy system has been completely installed and is a viable system for
             449      saving or production of energy from renewable resources.


             450          (11) The Utah Geological Survey and the commission are authorized to promulgate
             451      rules in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, which
             452      are necessary to implement this section.
             453          (12) The [Uniform School] Education Fund shall be reimbursed by transfers from the
             454      General Fund for any tax credits taken under this section.
             455          Section 8. Section 59-10-1105 is amended to read:
             456           59-10-1105. Tax credit for hand tools used in farming operations -- Procedures
             457      for refund -- Transfers from General Fund to Uniform School Fund -- Rulemaking
             458      authority.
             459          (1) For taxable years beginning on or after January 1, 2004, a claimant, estate, or trust
             460      may claim a refundable tax credit:
             461          (a) as provided in this section;
             462          (b) against taxes otherwise due under this chapter; and
             463          (c) in an amount equal to the amount of tax the claimant, estate, or trust pays:
             464          (i) on a purchase of a hand tool:
             465          (A) if the purchase is made on or after July 1, 2004;
             466          (B) if the hand tool is used or consumed primarily and directly in a farming operation
             467      in the state; and
             468          (C) if the unit purchase price of the hand tool is more than $250; and
             469          (ii) under Chapter 12, Sales and Use Tax Act, on the purchase described in Subsection
             470      (1)(c)(i).
             471          (2) A claimant, estate, or trust:
             472          (a) shall retain the following to establish the amount of tax the claimant, estate, or trust
             473      paid under Chapter 12, Sales and Use Tax Act, on the purchase described in Subsection
             474      (1)(c)(i):
             475          (i) a receipt;
             476          (ii) an invoice; or
             477          (iii) a document similar to a document described in Subsection (2)(a)(i) or (ii); and


             478          (b) may not carry forward or carry back a tax credit under this section.
             479          (3) (a) In accordance with any rules prescribed by the commission under Subsection
             480      (3)(b), the commission shall:
             481          (i) make a refund to a claimant, estate, or trust that claims a tax credit under this
             482      section if the amount of the tax credit exceeds the claimant's, estate's, or trust's tax liability
             483      under this chapter; and
             484          (ii) transfer at least annually from the General Fund into the [Uniform School]
             485      Education Fund an amount equal to the amount of tax credit claimed under this section.
             486          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             487      commission may make rules providing procedures for making:
             488          (i) a refund to a claimant, estate, or trust as required by Subsection (3)(a)(i); or
             489          (ii) transfers from the General Fund into the [Uniform School] Education Fund as
             490      required by Subsection (3)(a)(ii).
             491          Section 9. Section 63-38-2.6 is amended to read:
             492           63-38-2.6. Establishing an Education Budget Reserve Account -- Providing for
             493      deposits and expenditures from the account.
             494          (1) There is created within the [Uniform School] Education Fund a restricted account
             495      to be known as the Education Budget Reserve Account, which is designated to receive the
             496      surplus revenue required by this section.
             497          (2) (a) (i) At the end of any fiscal year in which the Division of Finance, in conjunction
             498      with the completion of the annual audit by the state auditor, determines that there is a surplus in
             499      the Education Fund, the Uniform School Fund [surplus] or both, 25% of the cumulative surplus
             500      shall be transferred to the Education Budget Reserve Account, except that the amount in the
             501      combined totals of the Education Budget Reserve Account and the General Fund Budget
             502      Reserve Account created in Section 63-38-2.5 may not exceed 6% of the total [of the Uniform
             503      School Fund appropriation amount and the General Fund appropriation amount] combined
             504      appropriations from the Education Fund and the General Fund for the fiscal year in which the
             505      surplus occurred.


             506          (ii) In addition to Subsection (2)(a)(i), if a surplus exists and if, within the last ten
             507      years, the Legislature has appropriated any money from the Education Budget Reserve Account
             508      that has not been replaced by appropriation or as provided in this Subsection (2)(a)(ii), the
             509      Division of Finance shall, before any contingent appropriations or other transfers required by
             510      law are made, transfer up to 25% more of the surplus to the Education Budget Reserve Account
             511      to replace the amounts appropriated until transfers of the surplus under this Subsection
             512      (2)(a)(ii) have replaced the appropriations from the fund.
             513          (b) The amount to be transferred to the Education Budget Reserve Account shall be
             514      determined before any other contingency appropriation using surplus funds.
             515          (3) Any appropriation made by the Legislature from the Education Budget Reserve
             516      Account may only be used to cover operating deficits in the state's public and higher education
             517      system.
             518          (4) All interest generated from investments of money in the Education Budget Reserve
             519      Account shall be deposited into the account.
             520          Section 10. Section 63-38-9 is amended to read:
             521           63-38-9. Revenue types -- Disposition of funds collected or credited by a state
             522      agency.
             523          (1) (a) The revenues enumerated in this section are established as major revenue types.
             524          (b) The Division of Finance shall:
             525          (i) account for revenues in accordance with generally accepted accounting principles;
             526      and
             527          (ii) use the major revenue types in internal accounting.
             528          (c) Each agency shall:
             529          (i) use the major revenue types enumerated in this section to account for revenues;
             530          (ii) deposit revenues and other public funds received by them by following the
             531      procedures and requirements of Title 51, Chapter 7, State Money Management Act; and
             532          (iii) expend revenues and public funds as required by this chapter.
             533          (2) The major revenue types are:


             534          (a) free revenue;
             535          (b) restricted revenue;
             536          (c) dedicated credits; and
             537          (d) fixed collections.
             538          (3) (a) Free revenue includes:
             539          (i) collections that are required by law to be deposited in the General Fund, the
             540      Education Fund, the Uniform School Fund, or the Transportation Fund;
             541          (ii) collections that are not otherwise designated by law;
             542          (iii) collections that are not externally restricted; and
             543          (iv) collections that are not included in an approved work program.
             544          (b) Each agency shall deposit its free revenues into the appropriate fund.
             545          (c) An agency may expend free revenues up to the amount specifically appropriated by
             546      the Legislature.
             547          (d) Any free revenue funds appropriated by the Legislature to an agency that remain
             548      unexpended at the end of the fiscal year lapse to the source fund unless the Legislature provides
             549      by law that those funds are nonlapsing.
             550          (4) (a) Restricted revenues are collections deposited by law into a separate fund or
             551      subfund that are designated for a specific program or purpose.
             552          (b) Each agency shall deposit its restricted revenues into a restricted fund.
             553          (c) The Legislature may appropriate restricted revenues from a restricted fund for the
             554      specific purpose or program designated by law.
             555          (d) If the fund equity of a restricted fund is insufficient to provide the funds
             556      appropriated from it by the Legislature, the Division of Finance may reduce the appropriation
             557      to a level that ensures that the fund equity is not less than zero.
             558          (e) Any restricted revenue funds appropriated by the Legislature to an agency that
             559      remain unexpended at the end of the fiscal year lapse to the restricted fund unless the
             560      Legislature provides by law that those funds, or the program or line item financed by those
             561      funds, are nonlapsing.


             562          (5) (a) Dedicated credits and federal revenues are collections by an agency that are
             563      deposited directly into an account for expenditure on a separate line item and program.
             564          (b) An agency may expend dedicated credits for any purpose within the program or line
             565      item.
             566          (c) (i) An agency may expend dedicated credits in excess of the amount appropriated as
             567      dedicated credits by the Legislature by following the procedures contained in this Subsection
             568      (5)(c).
             569          (ii) The agency shall develop a new work program and the justification for the work
             570      program and submit it to the Division of Finance and the director of the Governor's Office of
             571      Planning and Budget. Except for monies deposited as dedicated credits in the Drug Stamp Tax
             572      Fund under Section 59-19-105 or line items covering tuition and federal vocational funds at
             573      institutions of higher learning, any expenditure of dedicated credits in excess of amounts
             574      appropriated as dedicated credits by the Legislature may not be used to permanently increase
             575      personnel within the agency unless approved by the Legislature.
             576          (iii) The Division of Finance and the director of the Governor's Office of Planning and
             577      Budget shall review the program and submit their findings and recommendations to the
             578      governor.
             579          (iv) The governor may authorize the agency to expend its excess dedicated credits by
             580      approving the submitted work program.
             581          (v) The state's fiscal officer shall notify the Legislature by providing notice of the
             582      governor's action to the Office of Legislative Fiscal Analyst.
             583          (d) (i) All excess dedicated credits lapse to the appropriate fund at the end of the fiscal
             584      year unless the Legislature has designated the entire program or line item that is partially or
             585      fully funded from dedicated credits as nonlapsing.
             586          (ii) The Division of Finance shall determine the appropriate fund into which the
             587      dedicated credits lapse.
             588          (6) (a) Fixed collections are collections:
             589          (i) fixed by law or by the appropriation act at a specific amount; and


             590          (ii) required by law to be deposited into a separate line item and program.
             591          (b) The Legislature may establish by law the maximum amount of fixed collections
             592      that an agency may expend.
             593          (c) If an agency receives less than the maximum amount of expendable fixed
             594      collections established by law, the agency's authority to expend is limited to the amount of
             595      fixed collections that it receives.
             596          (d) If an agency receives fixed collections greater than the maximum amount of
             597      expendable fixed collections established by law, those excess amounts lapse to the General
             598      Fund, the Education Fund, the Uniform School Fund, or the Transportation Fund as designated
             599      by the director of the Division of Finance at the end of the fiscal year.
             600          (7) (a) Unless otherwise specifically provided by law, when an agency has a program
             601      or line item that is funded by more than one major revenue type, the agency shall expend its
             602      dedicated credits and fixed collections first.
             603          (b) Unless otherwise specifically provided by law, when programs or line items are
             604      funded by more than one major revenue type and include both free revenue and restricted
             605      revenue, an agency shall expend those sources based upon a proration of the amounts
             606      appropriated from each of those major revenue types.
             607          Section 11. Section 63-38c-103 is amended to read:
             608           63-38c-103. Definitions.
             609          As used in this chapter:
             610          (1) (a) "Appropriations" means actual unrestricted capital and operating appropriations
             611      from unrestricted General Fund sources and from non-Uniform School Fund income tax
             612      revenues as presented in the governor's executive budgets.
             613          (b) "Appropriation" includes appropriations that are contingent upon available
             614      surpluses in the General Fund.
             615          (c) "Appropriations" does not mean:
             616          (i) debt service expenditures;
             617          (ii) emergency expenditures;


             618          (iii) expenditures from all other fund or subfund sources presented in the executive
             619      budgets;
             620          (iv) transfers or appropriations from the Education Fund to the Uniform School Fund;
             621          [(iv)] (v) transfers into, or appropriations made to, the General Fund Budget Reserve
             622      Account established in Section 63-38-2.5 ;
             623          [(v)] (vi) transfers into, or appropriations made to, the Education Budget Reserve
             624      Account established in Section 63-38-2.6 ;
             625          [(vi)] (vii) monies appropriated to fund the total one-time project costs for the
             626      construction of capital developments as defined in Section 63A-5-104 ;
             627          [(vii)] (viii) appropriations made to the Centennial Highway Fund Restricted Account
             628      created by Section 72-2-118 ; or
             629          [(viii)] (ix) appropriations made to the Transportation Investment Fund of 2005 created
             630      by Section 72-2-124 .
             631          (2) "Base year real per capita appropriations" means the result obtained for the state by
             632      dividing the fiscal year 1985 actual appropriations of the state less debt monies by:
             633          (a) the state's July 1, 1983 population; and
             634          (b) the fiscal year 1983 inflation index divided by 100.
             635          (3) "Calendar year" means the time period beginning on January 1 of any given year
             636      and ending on December 31 of the same year.
             637          (4) "Fiscal emergency" means an extraordinary occurrence requiring immediate
             638      expenditures and includes the settlement under Chapter 4, Laws of Utah 1988, Fourth Special
             639      Session.
             640          (5) "Fiscal year" means the time period beginning on July 1 of any given year and
             641      ending on June 30 of the subsequent year.
             642          (6) "Fiscal year 1985 actual base year appropriations" means fiscal year 1985 actual
             643      capital and operations appropriations from General Fund and non-Uniform School Fund
             644      income tax revenue sources, less debt monies.
             645          (7) "Inflation index" means the change in the general price level of goods and services


             646      as measured by the Gross National Product Implicit Price Deflator of the Bureau of Economic
             647      Analysis, U.S. Department of Commerce calculated as provided in Section 63-38c-202 .
             648          (8) (a) "Maximum allowable appropriations limit" means the appropriations that could
             649      be, or could have been, spent in any given year under the limitations of this chapter.
             650          (b) "Maximum allowable appropriations limit" does not mean actual appropriations
             651      spent or actual expenditures.
             652          (9) "Most recent fiscal year's inflation index" means the fiscal year inflation index two
             653      fiscal years previous to the fiscal year for which the maximum allowable inflation and
             654      population appropriations limit is being computed under this chapter.
             655          (10) "Most recent fiscal year's population" means the fiscal year population two fiscal
             656      years previous to the fiscal year for which the maximum allowable inflation and population
             657      appropriations limit is being computed under this chapter.
             658          (11) "Population" means the number of residents of the state as of July 1 of each year
             659      as calculated by the Governor's Office of Planning and Budget according to the procedures and
             660      requirements of Section 63-38c-202 .
             661          (12) "Revenues" means the revenues of the state from every tax, penalty, receipt, and
             662      other monetary exaction and interest connected with it that are recorded as unrestricted revenue
             663      of the General Fund and from non-Uniform School Fund income tax revenues, except as
             664      specifically exempted by this chapter.
             665          (13) "Security" means any bond, note, warrant, or other evidence of indebtedness,
             666      whether or not the bond, note, warrant, or other evidence of indebtedness is or constitutes an
             667      "indebtedness" within the meaning of any provision of the constitution or laws of this state.


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