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S.B. 81

             1     

SCHOOL PROPERTY TAX FUNDING

             2     
2013 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Aaron Osmond

             5     
House Sponsor: Daniel McCay

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill makes changes related to school property taxes and funding.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    sets the school minimum basic tax rate at a fixed rate;
             14          .    repeals certain public notice requirements related to the school minimum basic tax
             15      rate;
             16          .    amends a school board local levy;
             17          .    establishes certain public notice and hearing requirements if a school district
             18      imposes a local tax rate that does not offset the revenue increase from the fixed
             19      school minimum basic tax rate; and
             20          .    makes technical and conforming changes.
             21      Money Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          This bill has retrospective operation to January 1, 2013.
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          11-13-302, as last amended by Laws of Utah 2011, Chapter 371


             28          53A-16-113, as enacted by Laws of Utah 2011, Chapter 371
             29          53A-17a-103, as last amended by Laws of Utah 2011, Chapter 371
             30          53A-17a-135, as last amended by Laws of Utah 2012, Chapters 4 and 421
             31          53A-17a-164, as enacted by Laws of Utah 2011, Chapter 371
             32          59-2-102, as last amended by Laws of Utah 2012, Chapter 240
             33          59-2-926, as last amended by Laws of Utah 2009, Chapter 388
             34          63I-1-253, as last amended by Laws of Utah 2012, Chapter 369
             35     
             36      Be it enacted by the Legislature of the state of Utah:
             37          Section 1. Section 11-13-302 is amended to read:
             38           11-13-302. Payment of fee in lieu of ad valorem property tax by certain energy
             39      suppliers -- Method of calculating -- Collection -- Extent of tax lien.
             40          (1) (a) Each project entity created under this chapter that owns a project and that sells
             41      any capacity, service, or other benefit from it to an energy supplier or suppliers whose tangible
             42      property is not exempted by Utah Constitution Article XIII, Section 3, from the payment of ad
             43      valorem property tax, shall pay an annual fee in lieu of ad valorem property tax as provided in
             44      this section to each taxing jurisdiction within which the project or any part of it is located.
             45          (b) For purposes of this section, "annual fee" means the annual fee described in
             46      Subsection (1)(a) that is in lieu of ad valorem property tax.
             47          (c) The requirement to pay an annual fee shall commence:
             48          (i) with respect to each taxing jurisdiction that is a candidate receiving the benefit of
             49      impact alleviation payments under contracts or determination orders provided for in Sections
             50      11-13-305 and 11-13-306 , with the fiscal year of the candidate following the fiscal year of the
             51      candidate in which the date of commercial operation of the last generating unit, other than any
             52      generating unit providing additional project capacity, of the project occurs, or, in the case of
             53      any facilities providing additional project capacity, with the fiscal year of the candidate
             54      following the fiscal year of the candidate in which the date of commercial operation of the
             55      generating unit providing the additional project capacity occurs; and
             56          (ii) with respect to any taxing jurisdiction other than a taxing jurisdiction described in
             57      Subsection (1)(c)(i), with the fiscal year of the taxing jurisdiction in which construction of the
             58      project commences, or, in the case of facilities providing additional project capacity, with the


             59      fiscal year of the taxing jurisdiction in which construction of those facilities commences.
             60          (d) The requirement to pay an annual fee shall continue for the period of the useful life
             61      of the project or facilities.
             62          (2) (a) The annual fees due a school district shall be as provided in Subsection (2)(b)
             63      because the ad valorem property tax imposed by a school district and authorized by the
             64      Legislature represents both:
             65          (i) a levy mandated by the state for the state minimum school program under Section
             66      53A-17a-135 ; and
             67          (ii) local levies for capital outlay and other purposes under Sections 53A-16-113 ,
             68      53A-17a-133 , and 53A-17a-164 .
             69          (b) The annual fees due a school district shall be as follows:
             70          (i) the project entity shall pay to the school district an annual fee for the state minimum
             71      school program at the rate imposed by the school district and authorized by the Legislature
             72      under Subsection 53A-17a-135 [(1)](2); and
             73          (ii) for all other local property tax levies authorized to be imposed by a school district,
             74      the project entity shall pay to the school district either:
             75          (A) an annual fee; or
             76          (B) impact alleviation payments under contracts or determination orders provided for
             77      in Sections 11-13-305 and 11-13-306 .
             78          (3) (a) An annual fee due a taxing jurisdiction for a particular year shall be calculated
             79      by multiplying the tax rate or rates of the jurisdiction for that year by the product obtained by
             80      multiplying the fee base or value determined in accordance with Subsection (4) for that year of
             81      the portion of the project located within the jurisdiction by the percentage of the project which
             82      is used to produce the capacity, service, or other benefit sold to the energy supplier or suppliers.
             83          (b) As used in this section, "tax rate," when applied in respect to a school district,
             84      includes any assessment to be made by the school district under Subsection (2) or Section
             85      63M-5-302 .
             86          (c) There is to be credited against the annual fee due a taxing jurisdiction for each year,
             87      an amount equal to the debt service, if any, payable in that year by the project entity on bonds,
             88      the proceeds of which were used to provide public facilities and services for impact alleviation
             89      in the taxing jurisdiction in accordance with Sections 11-13-305 and 11-13-306 .


             90          (d) The tax rate for the taxing jurisdiction for that year shall be computed so as to:
             91          (i) take into account the fee base or value of the percentage of the project located
             92      within the taxing jurisdiction determined in accordance with Subsection (4) used to produce the
             93      capacity, service, or other benefit sold to the supplier or suppliers; and
             94          (ii) reflect any credit to be given in that year.
             95          (4) (a) Except as otherwise provided in this section, the annual fees required by this
             96      section shall be paid, collected, and distributed to the taxing jurisdiction as if:
             97          (i) the annual fees were ad valorem property taxes; and
             98          (ii) the project were assessed at the same rate and upon the same measure of value as
             99      taxable property in the state.
             100          (b) (i) Notwithstanding Subsection (4)(a), for purposes of an annual fee required by
             101      this section, the fee base of a project may be determined in accordance with an agreement
             102      among:
             103          (A) the project entity; and
             104          (B) any county that:
             105          (I) is due an annual fee from the project entity; and
             106          (II) agrees to have the fee base of the project determined in accordance with the
             107      agreement described in this Subsection (4).
             108          (ii) The agreement described in Subsection (4)(b)(i):
             109          (A) shall specify each year for which the fee base determined by the agreement shall be
             110      used for purposes of an annual fee; and
             111          (B) may not modify any provision of this chapter except the method by which the fee
             112      base of a project is determined for purposes of an annual fee.
             113          (iii) For purposes of an annual fee imposed by a taxing jurisdiction within a county
             114      described in Subsection (4)(b)(i)(B), the fee base determined by the agreement described in
             115      Subsection (4)(b)(i) shall be used for purposes of an annual fee imposed by that taxing
             116      jurisdiction.
             117          (iv) (A) If there is not agreement as to the fee base of a portion of a project for any
             118      year, for purposes of an annual fee, the State Tax Commission shall determine the value of that
             119      portion of the project for which there is not an agreement:
             120          (I) for that year; and


             121          (II) using the same measure of value as is used for taxable property in the state.
             122          (B) The valuation required by Subsection (4)(b)(iv)(A) shall be made by the State Tax
             123      Commission in accordance with rules made by the State Tax Commission.
             124          (c) Payments of the annual fees shall be made from:
             125          (i) the proceeds of bonds issued for the project; and
             126          (ii) revenues derived by the project entity from the project.
             127          (d) (i) The contracts of the project entity with the purchasers of the capacity, service, or
             128      other benefits of the project whose tangible property is not exempted by Utah Constitution
             129      Article XIII, Section 3, from the payment of ad valorem property tax shall require each
             130      purchaser, whether or not located in the state, to pay, to the extent not otherwise provided for,
             131      its share, determined in accordance with the terms of the contract, of these fees.
             132          (ii) It is the responsibility of the project entity to enforce the obligations of the
             133      purchasers.
             134          (5) (a) The responsibility of the project entity to make payment of the annual fees is
             135      limited to the extent that there is legally available to the project entity, from bond proceeds or
             136      revenues, money to make these payments, and the obligation to make payments of the annual
             137      fees is not otherwise a general obligation or liability of the project entity.
             138          (b) No tax lien may attach upon any property or money of the project entity by virtue of
             139      any failure to pay all or any part of an annual fee.
             140          (c) The project entity or any purchaser may contest the validity of an annual fee to the
             141      same extent as if the payment was a payment of the ad valorem property tax itself.
             142          (d) The payments of an annual fee shall be reduced to the extent that any contest is
             143      successful.
             144          (6) (a) The annual fee described in Subsection (1):
             145          (i) shall be paid by a public agency that:
             146          (A) is not a project entity; and
             147          (B) owns an interest in a facility providing additional project capacity if the interest is
             148      otherwise exempt from taxation pursuant to Utah Constitution, Article XIII, Section 3; and
             149          (ii) for a public agency described in Subsection (6)(a)(i), shall be calculated in
             150      accordance with Subsection (6)(b).
             151          (b) The annual fee required under Subsection (6)(a) shall be an amount equal to the tax


             152      rate or rates of the applicable taxing jurisdiction multiplied by the product of the following:
             153          (i) the fee base or value of the facility providing additional project capacity located
             154      within the jurisdiction;
             155          (ii) the percentage of the ownership interest of the public agency in the facility; and
             156          (iii) the portion, expressed as a percentage, of the public agency's ownership interest
             157      that is attributable to the capacity, service, or other benefit from the facility that is sold by the
             158      public agency to an energy supplier or suppliers whose tangible property is not exempted by
             159      Utah Constitution, Article XIII, Section 3, from the payment of ad valorem property tax.
             160          (c) A public agency paying the annual fee pursuant to Subsection (6)(a) shall have the
             161      obligations, credits, rights, and protections set forth in Subsections (1) through (5) with respect
             162      to its ownership interest as though it were a project entity.
             163          Section 2. Section 53A-16-113 is amended to read:
             164           53A-16-113. Capital local levy -- First class county required levy.
             165          (1) (a) Subject to the other requirements of this section and Subsection
             166      53A-17a-135 (7), for a calendar year beginning on or after January 1, 2012, a local school board
             167      may levy a tax to fund the school district's capital projects.
             168          (b) A tax rate imposed by a school district pursuant to this section may not exceed
             169      .0030 per dollar of taxable value in any calendar year.
             170          [(2) A school district that imposes a capital local levy in the calendar year beginning on
             171      January 1, 2012, is exempt from the public notice and hearing requirements of Section
             172      59-2-919 if the school district budgets an amount of ad valorem property tax revenue equal to
             173      or less than the sum of the following amounts:]
             174          [(a) the amount of revenue generated during the calendar year beginning on January 1,
             175      2011, from the sum of the following levies of a school district:]
             176          [(i) a capital outlay levy imposed under Section 53A-16-107 ; and]
             177          [(ii) the portion of the 10% of basic levy described in Section 53A-17a-145 that is
             178      budgeted for debt service or capital outlay; and]
             179          [(b) revenue from new growth as defined in Subsection 59-2-924 (4)(c).]
             180          [(3)] (2) Beginning January 1, 2012, in order to qualify for receipt of the state
             181      contribution toward the Minimum School Program described in Section 53A-17a-103 , a local
             182      school board in a county of the first class shall impose a capital local levy of a least .0006 per


             183      dollar of taxable value.
             184          [(4)] (3) (a) The county treasurer of a county of the first class shall distribute revenues
             185      generated by the .0006 portion of the capital local levy required in Subsection (2) to school
             186      districts within the county in accordance with Section 53A-16-114 .
             187          (b) If a school district in a county of the first class imposes a capital local levy pursuant
             188      to this section that exceeds .0006 per dollar of taxable value, the county treasurer shall
             189      distribute revenues generated by the portion of the capital local levy that exceeds .0006 to the
             190      school district imposing the levy.
             191          Section 3. Section 53A-17a-103 is amended to read:
             192           53A-17a-103. Definitions.
             193          As used in this chapter:
             194          (1) "Basic state-supported school program" or "basic program" means public education
             195      programs for kindergarten, elementary, and secondary school students that are operated and
             196      maintained for the amount derived by multiplying the number of weighted pupil units for each
             197      school district or charter school by the value established each year in statute, except as
             198      otherwise provided in this chapter.
             199          (2) (a) "Certified revenue levy" means a property tax levy that provides an amount of
             200      ad valorem property tax revenue equal to the sum of:
             201          (i) the amount of ad valorem property tax revenue to be generated statewide in the
             202      previous year from imposing a minimum basic tax rate, as specified in [Subsection] Section
             203      53A-17a-135 [(1)(a)]; and
             204          (ii) the product of:
             205          (A) new growth, as defined in:
             206          (I) Section 59-2-924 ; and
             207          (II) rules of the State Tax Commission; and
             208          (B) the minimum basic tax rate certified by the State Tax Commission for the previous
             209      year.
             210          (b) For purposes of this Subsection (2), "ad valorem property tax revenue" does not
             211      include property tax revenue received statewide from personal property that is:
             212          (i) assessed by a county assessor in accordance with Title 59, Chapter 2, Part 3, County
             213      Assessment; and


             214          (ii) semiconductor manufacturing equipment.
             215          (c) For purposes of calculating the certified revenue levy described in this Subsection
             216      (2), the State Tax Commission shall use:
             217          (i) the taxable value of real property assessed by a county assessor contained on the
             218      assessment roll;
             219          (ii) the taxable value of real and personal property assessed by the State Tax
             220      Commission; and
             221          (iii) the taxable year end value of personal property assessed by a county assessor
             222      contained on the prior year's assessment roll.
             223          (3) "Pupil in average daily membership (ADM)" means a full-day equivalent pupil.
             224          (4) (a) "State-supported minimum school program" or "Minimum School Program"
             225      means public school programs for kindergarten, elementary, and secondary schools as
             226      described in this Subsection (4).
             227          (b) The minimum school program established in school districts and charter schools
             228      shall include the equivalent of a school term of nine months as determined by the State Board
             229      of Education.
             230          (c) (i) The board shall establish the number of days or equivalent instructional hours
             231      that school is held for an academic school year.
             232          (ii) Education, enhanced by utilization of technologically enriched delivery systems,
             233      when approved by local school boards or charter school governing boards, shall receive full
             234      support by the State Board of Education as it pertains to fulfilling the attendance requirements,
             235      excluding time spent viewing commercial advertising.
             236          (d) The Minimum School Program includes a program or allocation funded by a line
             237      item appropriation or other appropriation designated as follows:
             238          (i) Basic School Program;
             239          (ii) Related to Basic Programs;
             240          (iii) Voted and Board Levy Programs; or
             241          (iv) Minimum School Program.
             242          (5) "Weighted pupil unit or units or WPU or WPUs" means the unit of measure of
             243      factors that is computed in accordance with this chapter for the purpose of determining the
             244      costs of a program on a uniform basis for each district.


             245          Section 4. Section 53A-17a-135 is amended to read:
             246           53A-17a-135. Minimum basic tax rate -- Certified revenue levy.
             247          (1) As used in this section:
             248          (a) "Adjusted certified tax rate for board-authorized discretionary local taxes" means a
             249      combined certified tax rate for the board-authorized discretionary local taxes for a year minus
             250      the basic levy increment rate for that year.
             251          (b) "Basic levy increment rate" means the difference between the:
             252          (i) minimum basic tax rate provided in Subsection (2); and
             253          (ii) the certified revenue levy.
             254          (c) "Board-authorized discretionary local taxes" means taxes imposed in accordance
             255      with Sections 53A-16-113 and 53A-17a-164 .
             256          (d) "Certified tax rate" is as defined in Section 59-2-924 .
             257          (e) "Fixed minimum basic tax rate" means a tax rate of 0.001691.
             258          [(1)] (2) (a) In order to qualify for receipt of the state contribution toward the basic
             259      program and as its contribution toward its costs of the basic program, each school district shall
             260      impose a minimum basic tax rate per dollar of taxable value [that generates $289,021,900 in
             261      revenues statewide] in accordance with this section.
             262          [(b) The preliminary estimate for the 2012-13 minimum basic tax rate is .001665.]
             263          (b) Beginning on January 1, 2013, the minimum basic tax rate is the greater of:
             264          (i) the certified revenue levy; or
             265          (ii) the fixed minimum basic tax rate.
             266          [(c)] (3) The State Tax Commission shall certify on or before June 22 the [rate that
             267      generates $289,021,900 in revenues statewide] minimum basic tax rate to be imposed under
             268      Subsection (2).
             269          [(d) If the minimum basic tax rate exceeds the certified revenue levy as defined in
             270      Section 53A-17a-103 , the state is subject to the notice requirements of Section 59-2-926 .]
             271          [(2)] (4) (a) The state shall contribute to each district toward the cost of the basic
             272      program in the district that portion which exceeds the proceeds of the levy authorized under
             273      Subsection [(1)] (2).
             274          (b) In accord with the state strategic plan for public education and to fulfill its
             275      responsibility for the development and implementation of that plan, the Legislature instructs


             276      the State Board of Education, the governor, and the Office of Legislative Fiscal Analyst in each
             277      of the coming five years to develop budgets that will fully fund student enrollment growth.
             278          [(3)] (5) (a) If the proceeds of the levy authorized under Subsection [(1)] (2) equal or
             279      exceed the cost of the basic program in a school district, no state contribution shall be made to
             280      the basic program.
             281          (b) The proceeds of the levy authorized under Subsection [(1)] (2) [which] that exceed
             282      the cost of the basic program shall be paid into the Uniform School Fund as provided by law.
             283          (6) The Legislature shall annually increase the dollar amount appropriated for the basic
             284      program by an amount equal to any difference between:
             285          (a) the amount of revenue generated statewide by the tax rate imposed in accordance
             286      with Subsection (2); and
             287          (b) the amount of revenue that would be generated statewide by a tax rate equal to the
             288      certified revenue levy.
             289          (7) A school district is subject to the notice and hearing requirements of Section
             290      59-2-919 if the school district imposes a combined tax rate for board-authorized discretionary
             291      local taxes that exceeds the adjusted certified tax rate for board-authorized discretionary local
             292      taxes.
             293          Section 5. Section 53A-17a-164 is amended to read:
             294           53A-17a-164. Board local levy -- State guarantee.
             295          (1) As used in this section:
             296          (a) "Property tax base per student" means a school district's total taxable property
             297      values divided by the school district's student enrollment, based on the October enrollment
             298      counts.
             299          (b) "Statewide average property tax base per student" means the total statewide taxable
             300      property value divided by total school district student enrollment, based on the October
             301      enrollment counts.
             302          [(1)] (2) Subject to the other requirements of this section and Subsection
             303      53A-17a-135 (7), for a calendar year beginning on or after January 1, 2012, a local school board
             304      may levy a tax to fund the school district's general fund.
             305          [(2)] (3) (a) Except as provided in Subsection [(2)] (3)(b), a tax rate imposed by a
             306      school district pursuant to this section may not exceed .0018 per dollar of taxable value in any


             307      calendar year.
             308          (b) A tax rate imposed by a school district pursuant to this section may not exceed
             309      .0025 per dollar of taxable value in any calendar year if[,]:
             310          (i) the school district had a property tax base per student less than the statewide
             311      average property tax base per student in any of the prior three years; or
             312          (ii) during the calendar year beginning on January 1, 2011, the school district's
             313      combined tax rate for the following levies was greater than .0018 per dollar of taxable value:
             314          [(i)] (A) a recreation levy imposed under Section 11-2-7 ;
             315          [(ii)] (B) a transportation levy imposed under Section 53A-17a-127 ;
             316          [(iii)] (C) a board-authorized levy imposed under Section 53A-17a-134 ;
             317          [(iv)] (D) an impact aid levy imposed under Section 53A-17a-143 ;
             318          [(v)] (E) the portion of a 10% of basic levy imposed under Section 53A-17a-145 that is
             319      budgeted for purposes other than capital outlay or debt service;
             320          [(vi)] (F) a reading levy imposed under Section 53A-17a-151 ; and
             321          [(vii)] (G) a tort liability levy imposed under Section 63G-1-704 .
             322          [(3)] (4) (a) In addition to the revenue a school district collects from the imposition of a
             323      levy pursuant to this section, the state shall contribute an amount sufficient to guarantee that
             324      each .0001 of the first .0004 per dollar of taxable value generates an amount equal to .010544
             325      times the value of the prior year's weighted pupil unit.
             326          (b) (i) The amount of state guarantee money to which a school district would otherwise
             327      be entitled to under this Subsection [(3)] (4) may not be reduced for the sole reason that the
             328      district's levy is reduced as a consequence of changes in the certified tax rate under Section
             329      59-2-924 pursuant to changes in property valuation.
             330          (ii) Subsection [(3)] (4)(b)(i) applies for a period of five years following any changes in
             331      the certified tax rate.
             332          [(4) A school district that imposes a board local levy in the calendar year beginning on
             333      January 1, 2012, is exempt from the public notice and hearing requirements of Section
             334      59-2-919 if the school district budgets an amount of ad valorem property tax revenue equal to
             335      or less than the sum of the following amounts:]
             336          [(a) the amount of revenue generated during the calendar year beginning on January 1,
             337      2011, from the sum of the following levies of a school district:]


             338          [(i) a recreation levy imposed under Section 11-2-7 ;]
             339          [(ii) a transportation levy imposed under Section 53A-17a-127 ;]
             340          [(iii) a board-authorized levy imposed under Section 53A-17a-134 ;]
             341          [(iv) an impact aid levy imposed under Section 53A-17a-143 ;]
             342          [(v) the portion of a 10% of basic levy imposed under Section 53A-17a-145 that is
             343      budgeted for purposes other than capital outlay or debt service;]
             344          [(vi) a reading levy imposed under Section 53A-17a-151 ; and]
             345          [(vii) a tort liability levy imposed under Section 63G-1-704 ; and]
             346          [(b) revenue from new growth as defined in Subsection 59-2-924 (4)(c).]
             347          Section 6. Section 59-2-102 is amended to read:
             348           59-2-102. Definitions.
             349          As used in this chapter and title:
             350          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
             351      engaging in dispensing activities directly affecting agriculture or horticulture with an
             352      airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
             353      rotorcraft's use for agricultural and pest control purposes.
             354          (2) "Air charter service" means an air carrier operation which requires the customer to
             355      hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
             356      trip.
             357          (3) "Air contract service" means an air carrier operation available only to customers
             358      who engage the services of the carrier through a contractual agreement and excess capacity on
             359      any trip and is not available to the public at large.
             360          (4) "Aircraft" is as defined in Section 72-10-102 .
             361          (5) (a) Except as provided in Subsection (5)(b), "airline" means an air carrier that:
             362          (i) operates:
             363          (A) on an interstate route; and
             364          (B) on a scheduled basis; and
             365          (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
             366      regularly scheduled route.
             367          (b) "Airline" does not include an:
             368          (i) air charter service; or


             369          (ii) air contract service.
             370          (6) "Assessment roll" means a permanent record of the assessment of property as
             371      assessed by the county assessor and the commission and may be maintained manually or as a
             372      computerized file as a consolidated record or as multiple records by type, classification, or
             373      categories.
             374          (7) (a) "Certified revenue levy" means a property tax levy that provides an amount of
             375      ad valorem property tax revenue equal to the sum of:
             376          (i) the amount of ad valorem property tax revenue to be generated statewide in the
             377      previous year from imposing a school minimum basic tax rate, as specified in [Subsection]
             378      Section 53A-17a-135 [(1)(a)], or multicounty assessing and collecting levy, as specified in
             379      Section 59-2-1602 ; and
             380          (ii) the product of:
             381          (A) new growth, as defined in:
             382          (I) Section 59-2-924 ; and
             383          (II) rules of the commission; and
             384          (B) the school minimum basic tax rate or multicounty assessing and collecting levy
             385      certified by the commission for the previous year.
             386          (b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
             387      include property tax revenue received by a taxing entity from personal property that is:
             388          (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
             389          (ii) semiconductor manufacturing equipment.
             390          (c) For purposes of calculating the certified revenue levy described in this Subsection
             391      (7), the commission shall use:
             392          (i) the taxable value of real property assessed by a county assessor contained on the
             393      assessment roll;
             394          (ii) the taxable value of real and personal property assessed by the commission; and
             395          (iii) the taxable year end value of personal property assessed by a county assessor
             396      contained on the prior year's assessment roll.
             397          (8) "County-assessed commercial vehicle" means:
             398          (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
             399      Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or


             400      property in furtherance of the owner's commercial enterprise;
             401          (b) any passenger vehicle owned by a business and used by its employees for
             402      transportation as a company car or vanpool vehicle; and
             403          (c) vehicles which are:
             404          (i) especially constructed for towing or wrecking, and which are not otherwise used to
             405      transport goods, merchandise, or people for compensation;
             406          (ii) used or licensed as taxicabs or limousines;
             407          (iii) used as rental passenger cars, travel trailers, or motor homes;
             408          (iv) used or licensed in this state for use as ambulances or hearses;
             409          (v) especially designed and used for garbage and rubbish collection; or
             410          (vi) used exclusively to transport students or their instructors to or from any private,
             411      public, or religious school or school activities.
             412          (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
             413      "designated tax area" means a tax area created by the overlapping boundaries of only the
             414      following taxing entities:
             415          (i) a county; and
             416          (ii) a school district.
             417          (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
             418      by the overlapping boundaries of:
             419          (i) the taxing entities described in Subsection (9)(a); and
             420          (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
             421      and the boundaries of the city or town are identical; or
             422          (B) a special service district if the boundaries of the school district under Subsection
             423      (9)(a) are located entirely within the special service district.
             424          (10) "Eligible judgment" means a final and unappealable judgment or order under
             425      Section 59-2-1330 :
             426          (a) that became a final and unappealable judgment or order no more than 14 months
             427      prior to the day on which the notice required by Section 59-2-919.1 is required to be mailed;
             428      and
             429          (b) for which a taxing entity's share of the final and unappealable judgment or order is
             430      greater than or equal to the lesser of:


             431          (i) $5,000; or
             432          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
             433      previous fiscal year.
             434          (11) (a) "Escaped property" means any property, whether personal, land, or any
             435      improvements to the property, subject to taxation and is:
             436          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
             437      to the wrong taxpayer by the assessing authority;
             438          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
             439      comply with the reporting requirements of this chapter; or
             440          (iii) undervalued because of errors made by the assessing authority based upon
             441      incomplete or erroneous information furnished by the taxpayer.
             442          (b) Property which is undervalued because of the use of a different valuation
             443      methodology or because of a different application of the same valuation methodology is not
             444      "escaped property."
             445          (12) "Fair market value" means the amount at which property would change hands
             446      between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
             447      and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
             448      market value" shall be determined using the current zoning laws applicable to the property in
             449      question, except in cases where there is a reasonable probability of a change in the zoning laws
             450      affecting that property in the tax year in question and the change would have an appreciable
             451      influence upon the value.
             452          (13) "Farm machinery and equipment," for purposes of the exemption provided under
             453      Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
             454      handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
             455      tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
             456      equipment used primarily for agricultural purposes; but does not include vehicles required to be
             457      registered with the Motor Vehicle Division or vehicles or other equipment used for business
             458      purposes other than farming.
             459          (14) "Geothermal fluid" means water in any form at temperatures greater than 120
             460      degrees centigrade naturally present in a geothermal system.
             461          (15) "Geothermal resource" means:


             462          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
             463      and
             464          (b) the energy, in whatever form, including pressure, present in, resulting from, created
             465      by, or which may be extracted from that natural heat, directly or through a material medium.
             466          (16) (a) "Goodwill" means:
             467          (i) acquired goodwill that is reported as goodwill on the books and records:
             468          (A) of a taxpayer; and
             469          (B) that are maintained for financial reporting purposes; or
             470          (ii) the ability of a business to:
             471          (A) generate income:
             472          (I) that exceeds a normal rate of return on assets; and
             473          (II) resulting from a factor described in Subsection (16)(b); or
             474          (B) obtain an economic or competitive advantage resulting from a factor described in
             475      Subsection (16)(b).
             476          (b) The following factors apply to Subsection (16)(a)(ii):
             477          (i) superior management skills;
             478          (ii) reputation;
             479          (iii) customer relationships;
             480          (iv) patronage; or
             481          (v) a factor similar to Subsections (16)(b)(i) through (iv).
             482          (c) "Goodwill" does not include:
             483          (i) the intangible property described in Subsection (20)(a) or (b);
             484          (ii) locational attributes of real property, including:
             485          (A) zoning;
             486          (B) location;
             487          (C) view;
             488          (D) a geographic feature;
             489          (E) an easement;
             490          (F) a covenant;
             491          (G) proximity to raw materials;
             492          (H) the condition of surrounding property; or


             493          (I) proximity to markets;
             494          (iii) value attributable to the identification of an improvement to real property,
             495      including:
             496          (A) reputation of the designer, builder, or architect of the improvement;
             497          (B) a name given to, or associated with, the improvement; or
             498          (C) the historic significance of an improvement; or
             499          (iv) the enhancement or assemblage value specifically attributable to the interrelation
             500      of the existing tangible property in place working together as a unit.
             501          (17) "Governing body" means:
             502          (a) for a county, city, or town, the legislative body of the county, city, or town;
             503          (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
             504      Local Districts, the local district's board of trustees;
             505          (c) for a school district, the local board of education; or
             506          (d) for a special service district under Title 17D, Chapter 1, Special Service District
             507      Act:
             508          (i) the legislative body of the county or municipality that created the special service
             509      district, to the extent that the county or municipal legislative body has not delegated authority
             510      to an administrative control board established under Section 17D-1-301 ; or
             511          (ii) the administrative control board, to the extent that the county or municipal
             512      legislative body has delegated authority to an administrative control board established under
             513      Section 17D-1-301 .
             514          (18) (a) For purposes of Section 59-2-103 :
             515          (i) "household" means the association of persons who live in the same dwelling,
             516      sharing its furnishings, facilities, accommodations, and expenses; and
             517          (ii) "household" includes married individuals, who are not legally separated, that have
             518      established domiciles at separate locations within the state.
             519          (b) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             520      commission may make rules defining the term "domicile."
             521          (19) (a) Except as provided in Subsection (19)(c), "improvement" means a building,
             522      structure, fixture, fence, or other item that is permanently attached to land, regardless of
             523      whether the title has been acquired to the land, if:


             524          (i) (A) attachment to land is essential to the operation or use of the item; and
             525          (B) the manner of attachment to land suggests that the item will remain attached to the
             526      land in the same place over the useful life of the item; or
             527          (ii) removal of the item would:
             528          (A) cause substantial damage to the item; or
             529          (B) require substantial alteration or repair of a structure to which the item is attached.
             530          (b) "Improvement" includes:
             531          (i) an accessory to an item described in Subsection (19)(a) if the accessory is:
             532          (A) essential to the operation of the item described in Subsection (19)(a); and
             533          (B) installed solely to serve the operation of the item described in Subsection (19)(a);
             534      and
             535          (ii) an item described in Subsection (19)(a) that:
             536          (A) is temporarily detached from the land for repairs; and
             537          (B) remains located on the land.
             538          (c) Notwithstanding Subsections (19)(a) and (b), "improvement" does not include:
             539          (i) an item considered to be personal property pursuant to rules made in accordance
             540      with Section 59-2-107 ;
             541          (ii) a moveable item that is attached to land:
             542          (A) for stability only; or
             543          (B) for an obvious temporary purpose;
             544          (iii) (A) manufacturing equipment and machinery; or
             545          (B) essential accessories to manufacturing equipment and machinery;
             546          (iv) an item attached to the land in a manner that facilitates removal without substantial
             547      damage to:
             548          (A) the land; or
             549          (B) the item; or
             550          (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
             551      transportable factory-built housing unit is considered to be personal property under Section
             552      59-2-1503 .
             553          (20) "Intangible property" means:
             554          (a) property that is capable of private ownership separate from tangible property,


             555      including:
             556          (i) money;
             557          (ii) credits;
             558          (iii) bonds;
             559          (iv) stocks;
             560          (v) representative property;
             561          (vi) franchises;
             562          (vii) licenses;
             563          (viii) trade names;
             564          (ix) copyrights; and
             565          (x) patents;
             566          (b) a low-income housing tax credit;
             567          (c) goodwill; or
             568          (d) a renewable energy tax credit or incentive, including:
             569          (i) a federal renewable energy production tax credit under Section 45, Internal Revenue
             570      Code;
             571          (ii) a federal energy credit for qualified renewable electricity production facilities under
             572      Section 48, Internal Revenue Code;
             573          (iii) a federal grant for a renewable energy property under American Recovery and
             574      Reinvestment Act of 2009, Pub. L. No. 111-5, Section 1603; and
             575          (iv) a tax credit under Subsection 59-7-614 (2)(c).
             576          (21) "Low-income housing tax credit" means:
             577          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
             578      or
             579          (b) a low-income housing tax credit under:
             580          (i) Section 59-7-607 ; or
             581          (ii) Section 59-10-1010 .
             582          (22) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
             583          (23) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
             584      valuable mineral.
             585          (24) "Mining" means the process of producing, extracting, leaching, evaporating, or


             586      otherwise removing a mineral from a mine.
             587          (25) (a) "Mobile flight equipment" means tangible personal property that is:
             588          (i) owned or operated by an:
             589          (A) air charter service;
             590          (B) air contract service; or
             591          (C) airline; and
             592          (ii) (A) capable of flight;
             593          (B) attached to an aircraft that is capable of flight; or
             594          (C) contained in an aircraft that is capable of flight if the tangible personal property is
             595      intended to be used:
             596          (I) during multiple flights;
             597          (II) during a takeoff, flight, or landing; and
             598          (III) as a service provided by an air charter service, air contract service, or airline.
             599          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
             600      engine that is rotated:
             601          (A) at regular intervals; and
             602          (B) with an engine that is attached to the aircraft.
             603          (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
             604      commission may make rules defining the term "regular intervals."
             605          (26) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
             606      sand, rock, gravel, and all carboniferous materials.
             607          (27) "Personal property" includes:
             608          (a) every class of property as defined in Subsection (28) which is the subject of
             609      ownership and not included within the meaning of the terms "real estate" and "improvements";
             610          (b) gas and water mains and pipes laid in roads, streets, or alleys;
             611          (c) bridges and ferries;
             612          (d) livestock which, for the purposes of the exemption provided under Section
             613      59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish; and
             614          (e) outdoor advertising structures as defined in Section 72-7-502 .
             615          (28) (a) "Property" means property that is subject to assessment and taxation according
             616      to its value.


             617          (b) "Property" does not include intangible property as defined in this section.
             618          (29) "Public utility," for purposes of this chapter, means the operating property of a
             619      railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
             620      company, electrical corporation, telephone corporation, sewerage corporation, or heat
             621      corporation where the company performs the service for, or delivers the commodity to, the
             622      public generally or companies serving the public generally, or in the case of a gas corporation
             623      or an electrical corporation, where the gas or electricity is sold or furnished to any member or
             624      consumers within the state for domestic, commercial, or industrial use. Public utility also
             625      means the operating property of any entity or person defined under Section 54-2-1 except water
             626      corporations.
             627          (30) "Real estate" or "real property" includes:
             628          (a) the possession of, claim to, ownership of, or right to the possession of land;
             629          (b) all mines, minerals, and quarries in and under the land, all timber belonging to
             630      individuals or corporations growing or being on the lands of this state or the United States, and
             631      all rights and privileges appertaining to these; and
             632          (c) improvements.
             633          (31) "Residential property," for the purposes of the reductions and adjustments under
             634      this chapter, means any property used for residential purposes as a primary residence. It does
             635      not include property used for transient residential use or condominiums used in rental pools.
             636          (32) (a) "State-assessed commercial vehicle" means:
             637          (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
             638      to transport passengers, freight, merchandise, or other property for hire; or
             639          (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
             640      transports the vehicle owner's goods or property in furtherance of the owner's commercial
             641      enterprise.
             642          (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
             643      are specified in Subsection (8)(c) as county-assessed commercial vehicles.
             644          (33) "Taxable value" means fair market value less any applicable reduction allowed for
             645      residential property under Section 59-2-103 .
             646          (34) "Tax area" means a geographic area created by the overlapping boundaries of one
             647      or more taxing entities.


             648          (35) "Taxing entity" means any county, city, town, school district, special taxing
             649      district, local district under Title 17B, Limited Purpose Local Government Entities - Local
             650      Districts, or other political subdivision of the state with the authority to levy a tax on property.
             651          (36) "Tax roll" means a permanent record of the taxes charged on property, as extended
             652      on the assessment roll and may be maintained on the same record or records as the assessment
             653      roll or may be maintained on a separate record properly indexed to the assessment roll. It
             654      includes tax books, tax lists, and other similar materials.
             655          Section 7. Section 59-2-926 is amended to read:
             656           59-2-926. Proposed tax increase by state -- Notice -- Contents -- Dates.
             657          If the state authorizes a levy [pursuant to Section 53A-17a-135 that exceeds the
             658      certified revenue levy as defined in Section 53A-17a-103 or authorizes a levy] pursuant to
             659      Section 59-2-1602 that exceeds the certified revenue levy as defined in Section 59-2-102 , the
             660      state shall publish a notice no later than 10 days after the last day of the annual legislative
             661      general session that meets the following requirements:
             662          (1) (a) The Office of the Legislative Fiscal Analyst shall advertise that the state
             663      authorized a levy that generates revenue in excess of the previous year's ad valorem tax
             664      revenue, plus new growth, but exclusive of revenue from collections from redemptions,
             665      interest, and penalties:
             666          (i) in a newspaper of general circulation in the state; and
             667          (ii) as required in Section 45-1-101 .
             668          (b) Except an advertisement published on a website, the advertisement described in
             669      Subsection (1)(a):
             670          (i) shall be no less than 1/4 page in size and the type used shall be no smaller than 18
             671      point, and surrounded by a 1/4-inch border:
             672          (ii) may not be placed in that portion of the newspaper where legal notices and
             673      classified advertisements appear; and
             674          (iii) shall be run once.
             675          (2) The form and content of the notice shall be substantially as follows:
             676     
"NOTICE OF TAX INCREASE

             677          The state has budgeted an increase in its property tax revenue from $__________ to
             678      $__________ or ____%. The increase in property tax revenues will come from the following


             679      sources (include all of the following provisions):
             680          (a) $__________ of the increase will come from (provide an explanation of the cause
             681      of adjustment or increased revenues, such as reappraisals or factoring orders);
             682          (b) $__________ of the increase will come from natural increases in the value of the
             683      tax base due to (explain cause of new growth, such as new building activity, annexation, etc.);
             684          (c) a home valued at $100,000 in the state of Utah, which, based on last year's [(levy
             685      for the basic state-supported school program,] levy for the Property Tax Valuation Agency
             686      Fund, [or both)] paid $____________ in property taxes would pay the following:
             687          (i) $__________ if the state of Utah did not budget an increase in property tax revenue
             688      exclusive of new growth; and
             689          (ii) $__________ under the increased property tax revenues exclusive of new growth
             690      budgeted by the state of Utah."
             691          Section 8. Section 63I-1-253 is amended to read:
             692           63I-1-253. Repeal dates, Titles 53, 53A, and 53B.
             693          The following provisions are repealed on the following dates:
             694          (1) Section 53-3-232 , Conditional licenses, is repealed July 1, 2015.
             695          (2) Title 53A, Chapter 1a, Part 6, Public Education Job Enhancement Program is
             696      repealed July 1, 2020.
             697          (3) The State Instructional Materials Commission, created in Section 53A-14-101 , is
             698      repealed July 1, 2016.
             699          (4) Subsections 53A-16-113 [(3)](2) and [(4)] (3) are repealed December 31, 2016.
             700          (5) Section 53A-16-114 is repealed December 31, 2016.
             701          (6) Section 53A-17a-163 , Performance-based Compensation Pilot Program is repealed
             702      July 1, 2016.
             703          (7) Subsection 53C-3-203 (4)(b)(vii), which provides for the distribution of money
             704      from the Land Exchange Distribution Account to the Geological Survey for test wells, other
             705      hydrologic studies, and air quality monitoring in the West Desert, is repealed July 1, 2020.
             706          Section 9. Retrospective operation.
             707          This bill has retrospective operation to January 1, 2013.





Legislative Review Note
    as of 2-18-13 4:07 PM


Office of Legislative Research and General Counsel


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