Second Substitute S.B. 38

Representative John G. Mathis proposes the following substitute bill:

1 SEVERANCE TAX AMENDMENTS
2 2009 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: John L. Valentine
5 House Sponsor: John Dougall
6
7 LONG TITLE
8 General Description:
9 This bill provides for the disposition of certain revenues from severance taxes.
10 Highlighted Provisions:
11 This bill:
12 . amends the provisions relating to the deposition of certain severance tax revenues
13 into the permanent state trust fund;
14 . increases the amount of revenue to be deposited into the permanent state trust fund
15 over a six-year period beginning with fiscal year 2011-12;
16 . for fiscal years 2011-12 through 2014-15, requires a certain amount of revenue
17 collected from the severance tax on oil and gas to be distributed to the following:
18 . the Invasive Species Mitigation Fund;
19 . the Rangeland Improvement Fund;
20 . the Species Protection Account; and
21 . the Department of Natural Resources to be used for watershed rehabilitation or
22 restoration;
23 . defines terms; and
24 . makes technical changes.
25 Monies Appropriated in this Bill:

26 None
27 Other Special Clauses:
28 This bill takes effect on July 1, 2009.
29 Utah Code Sections Affected:
30 AMENDS:
31 4-2-8.7, as enacted by Laws of Utah 2008, Chapter 245
32 4-20-2, as last amended by Laws of Utah 2008, Chapter 399
33 51-9-302, as renumbered and amended by Laws of Utah 2008, Chapter 382
34 51-9-304, as last amended by Laws of Utah 2008, Chapters 141, 216 and renumbered
35 and amended by Laws of Utah 2008, Chapter 382
36 51-9-305, as enacted by Laws of Utah 2008, Chapter 141
37 59-5-115, as last amended by Laws of Utah 2008, Chapter 141
38 63-34-14, as last amended by Laws of Utah 2005, Chapter 71
39
40 Be it enacted by the Legislature of the state of Utah:
41 Section 1. Section 4-2-8.7 is amended to read:
42 4-2-8.7. Invasive Species Mitigation Fund created.
43 (1) As used in this section, "project" means an undertaking that prevents catastrophic
44 wildland fire through land restoration in a watershed that:
45 (a) is impacted by cheatgrass or other invasive species; or
46 (b) has a fuel load that may contribute to a catastrophic wildland fire.
47 (2) (a) There is created a restricted special revenue fund known as the "Invasive
48 Species Mitigation Fund."
49 (b) The fund shall consist of:
50 (i) money appropriated by the Legislature;
51 (ii) grants from the federal government; [and]
52 (iii) grants or donations from a person[.]; and
53 (iv) revenue received from the allocations described in Section 59-5-115 .
54 (3) Any unallocated balance in the fund at the end of the year is nonlapsing.
55 (4) (a) After consulting with the Department of Natural Resources and the
56 Conservation Commission, the department may expend fund monies:

57 (i) on a project implemented by:
58 (A) the department; or
59 (B) the Conservation Commission; or
60 (ii) by giving a grant for a project to:
61 (A) a state agency;
62 (B) a federal agency; or
63 (C) a federal, state, tribal, or private landowner.
64 (b) A grant to a federal landowner must be matched with at least an equal amount of
65 money by the federal landowner.
66 (c) In expending the fund monies authorized by Subsection (4)(a)(i), the department
67 shall use existing infrastructure and employees to plan and implement the project.
68 (5) In giving a grant, the department shall consider the effectiveness of a project in
69 preventing:
70 (a) first, the risk to public safety and health from:
71 (i) air pollution;
72 (ii) flooding; and
73 (iii) reduced visibility on a highway;
74 (b) second, damage to the environment, including:
75 (i) soil erosion;
76 (ii) degraded water quality; and
77 (iii) release of carbon; and
78 (c) third, damage to:
79 (i) a local economy; and
80 (ii) habitat for wildlife or livestock.
81 Section 2. Section 4-20-2 is amended to read:
82 4-20-2. Rangeland Improvement Fund -- Administered by department.
83 (1) (a) There is created a restricted special revenue fund known as the "Rangeland
84 Improvement Fund."
85 (b) The fund shall consist of:
86 (i) all monies received by the state from the United States Secretary of Interior under
87 the Taylor Grazing Act, 43 U.S.C. Section 315 et seq., for sales, leases, and fees;

88 (ii) grants or appropriations from the state or federal government;
89 (iii) grants from private foundations;
90 (iv) proceeds from the sale of a livestock watering right in accordance with Section
91 73-3-31 ; [and]
92 (v) revenue received from the allocations described in Section 59-5-115 ; and
93 [(v)] (vi) interest on fund monies.
94 (2) Any unallocated balance in the fund at the end of a fiscal year is nonlapsing.
95 (3) The department shall:
96 (a) administer the fund;
97 (b) obtain from the United States Department of Interior the receipts collected from:
98 (i) fees in each grazing district; and
99 (ii) the receipts collected from the sale or lease of public lands; and
100 (c) distribute fund monies in accordance with Section 4-20-3 .
101 Section 3. Section 51-9-302 is amended to read:
102 51-9-302. Definitions.
103 As used in this part:
104 (1) "Infrastructure and Economic Diversification Investment Account" means the
105 Infrastructure and Economic Diversification Investment Account created in Section 51-9-303 .
106 (2) "Mining base amount" means:
107 (a) $27,600,000 for fiscal years 2008-09, 2009-10, and 2010-11;
108 (b) $22,600,000 for fiscal year 2011-12;
109 (c) $17,600,000 for fiscal year 2012-13;
110 (d) $12,600,000 for fiscal year 2013-14;
111 (e) $7,600,000 for fiscal year 2014-15; and
112 (f) $2,600,000 for fiscal year 2015-16.
113 (3) "Oil and gas base amount" means:
114 (a) $71,000,000 for fiscal years 2008-09, 2009-10, and 2010-11;
115 (b) $56,000,000 for fiscal year 2011-12;
116 (c) $41,000,000 for fiscal year 2012-13;
117 (d) $26,000,000 for fiscal year 2013-14; and
118 (e) $11,000,000 for fiscal year 2014-15.

119 [(2)] (4) "Permanent state trust fund" means the permanent state trust fund created
120 under Utah Constitution Article XXII, Section 4.
121 [(3)] (5) "Severance Tax Holding Account" means the Severance Tax Holding Account
122 created in Section 51-9-304 .
123 Section 4. Section 51-9-304 is amended to read:
124 51-9-304. Creation of Severance Tax Holding Account -- Distribution of funds in
125 the account.
126 (1) (a) There is created a restricted account within the General Fund known as the
127 "Severance Tax Holding Account."
128 (b) The Severance Tax Holding Account shall consist of:
129 (i) appropriations from the Legislature;
130 (ii) grants from private foundations; and
131 (iii) all monies credited to the Severance Tax Holding Account under Section
132 51-9-305 .
133 (2) (a) The state treasurer shall invest monies in the account according to Title 51,
134 Chapter 7, State Money Management Act.
135 (b) The Division of Finance shall deposit interest or other earnings derived from
136 investment of account monies into the General Fund.
137 (3) [If authorized by law the] The Division of Finance shall deposit all of the monies in
138 the Severance Tax Holding Account as of June 30, 2009, into the permanent state trust fund.
139 Section 5. Section 51-9-305 is amended to read:
140 51-9-305. Crediting of certain severance tax revenues to the permanent state
141 trust fund.
142 (1) (a) After making the distributions of oil and gas severance tax revenues as required
143 under Sections 59-5-115 , 59-5-116 , and 59-5-119 , the Division of Finance shall make the
144 distributions required under Subsections (2) through (5).
145 (b) For purposes of this section, revenue collected from severance taxes on oil and gas
146 imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining, does not include
147 revenue that is distributed under Section 59-5-115 , 59-5-116 , or 59-5-119 .
148 (2) [Beginning] (a) For fiscal years beginning with fiscal year 2008-09[, if authorized
149 by law] and ending with fiscal year 2014-15, the Division of Finance shall credit to the

150 permanent state trust fund all revenue collected in a fiscal year from severance taxes on oil and
151 gas imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining, that exceed
152 [$71,000,000.] the oil and gas base amount.
153 (b) For fiscal years beginning on or after fiscal year 2015-16, the Division of Finance
154 shall credit all revenue collected in a fiscal year from severance taxes on oil and gas imposed
155 under Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining to the permanent state trust
156 fund.
157 (3) [Beginning] (a) For fiscal years beginning with fiscal year 2008-09[, if authorized
158 by law] and ending with fiscal year 2015-16, the Division of Finance shall credit to the
159 permanent state trust fund all revenue collected in a fiscal year from severance taxes on mining
160 imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining, that exceed
161 [$27,600,000.] the mining base amount.
162 (b) For fiscal years beginning on or after fiscal year 2016-17, the Division of Finance
163 shall credit all revenue collected in a fiscal year from severance taxes on mining imposed under
164 Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining to the permanent state trust fund.
165 (4) The state treasurer shall invest and separately account for the earnings on funds that
166 are deposited into the permanent state trust fund under this section.
167 (5) (a) In accordance with Utah Constitution Article XXII, Section 4, the interest and
168 dividends earned annually on revenue from severance taxes that are deposited into the
169 permanent state trust fund shall be deposited in the General Fund.
170 (b) Interest and dividends earned on revenue from severance taxes that are deposited in
171 the General Fund pursuant to Subsection (5)(a) shall be credited to the Infrastructure and
172 Economic Diversification Investment Account created in Section 51-9-303 .
173 Section 6. Section 59-5-115 is amended to read:
174 59-5-115. Disposition of taxes collected -- Credit to General Fund.
175 (1) For purposes of this section:
176 (a) "Invasive Species Mitigation Fund" means the Invasive Species Mitigation Fund
177 created in Section 4-2-8.7 .
178 (b) "Rangeland Improvement Fund" means the Rangeland Improvement Fund created
179 in Section 4-20-2 .
180 (c) "Species Protection Account" means the Species Protection Account created in

181 Section 63-34-14 .
182 (2) All taxes imposed and collected under Section 59-5-102 shall be paid to the
183 commission, promptly remitted to the state treasurer, and except those taxes otherwise
184 allocated under Section 51-9-305 , 59-5-116 , or 59-5-119 , or Subsections (3) through (7),
185 credited to the General Fund.
186 (3) For fiscal years beginning with fiscal year 2011-12 and ending with fiscal year
187 2014-15, the Division of Finance shall make the distributions required under Subsections (4)
188 through (7):
189 (a) after making the distributions of oil and gas severance tax revenues as required
190 under Sections 59-5-116 and 59-5-119 ; and
191 (b) before making the distributions of oil and gas severance tax revenues as required
192 under Section 51-9-305 .
193 (4) The Division of Finance shall credit to the Invasive Species Mitigation Fund the
194 lesser of:
195 (a) 2% of all revenue collected in a fiscal year from severance taxes on oil and gas
196 imposed under this chapter; or
197 (b) $1,000,000.
198 (5) The Division of Finance shall credit to the Rangeland Improvement Fund the lesser
199 of:
200 (a) 2% of all revenue collected in a fiscal year from severance taxes on oil and gas
201 imposed under this chapter; or
202 (b) $2,000,000.
203 (6) The Division of Finance shall credit to the Species Protection Account the lesser of:
204 (a) 2% of all revenue collected in a fiscal year from severance taxes on oil and gas
205 imposed under this chapter; or
206 (b) $1,000,000.
207 (7) (a) The Division of Finance shall transfer the lesser of the following to the
208 Department of Natural Resources as dedicated credits:
209 (i) 2% of all revenue collected in a fiscal year from severance taxes on oil and gas
210 imposed under this chapter; or
211 (ii) $2,000,000.

212 (b) The revenue received by the Department of Natural Resources described in
213 Subsection (7)(a) shall be expended for watershed rehabilitation or restoration.
214 Section 7. Section 63-34-14 is amended to read:
215 63-34-14. Species Protection Account.
216 (1) As used in this section, "species protection" means an action to protect any plant or
217 animal species identified as sensitive by the state or as threatened or endangered under the
218 Endangered Species Act of 1973, 16 U.S.C. Sec. 1531 et seq.
219 (2) There is created within the General Fund a restricted account known as the Species
220 Protection Account.
221 (3) The account shall consist of:
222 (a) revenue generated by the brine shrimp tax provided for in Title 59, Chapter 23,
223 Brine Shrimp Royalty Act; [and]
224 (b) revenue received from the allocations described in Section 59-5-115 ; and
225 [(b)] (c) interest earned on monies in the account.
226 (4) Monies in the account may be appropriated by the Legislature for the following
227 purposes:
228 (a) to develop and implement species status assessments and species protection
229 measures;
230 (b) to obtain biological opinions of proposed species protection measures;
231 (c) to conduct studies, investigations, and research into the effects of proposed species
232 protection measures;
233 (d) to verify species protection proposals that are not based on valid biological data;
234 (e) for Great Salt Lake wetlands mitigation projects in connection with the western
235 transportation corridor;
236 (f) to pay for the state's voluntary contributions to the Utah Reclamation Mitigation and
237 Conservation Account under the Central Utah Project Completion Act, Pub. L. No. 102-575,
238 Titles II-VI, 106 Stat. 4605-4655; and
239 (g) to pay for expenses of the State Tax Commission under Title 59, Chapter 23, Brine
240 Shrimp Royalty Act.
241 (5) The purposes specified in Subsections (4)(a) through (4)(d) may be accomplished
242 by the state or, in an appropriation act, the Legislature may authorize the Department of Natural

243 Resources to award grants to political subdivisions of the state to accomplish those purposes.
244 (6) Monies in the account may not be used to develop or implement a habitat
245 conservation plan required under federal law unless the federal government pays for at least 1/3
246 of the habitat conservation plan costs.
247 Section 8. Effective date.
248 This bill takes effect on July 1, 2009.