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First Substitute H.B. 226

Senator Lyle W. Hillyard proposes the following substitute bill:


             1     
SEVERANCE TAX AMENDMENTS

             2     
2014 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jim Nielson

             5     
Senate Sponsor: Lyle W. Hillyard

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill amends provisions related to severance taxes.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines terms;
             13          .    provides that certain severance tax revenue be deposited into the General Fund and
             14      the permanent state trust fund; and
             15          .    makes technical and conforming changes.
             16      Money Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22           35A-8-1608 , as renumbered and amended by Laws of Utah 2012, Chapter 212
             23           51-9-305 , as last amended by Laws of Utah 2011, Chapter 239
             24           59-5-115 , as last amended by Laws of Utah 2008, Chapter 141
             25           59-5-116 , as last amended by Laws of Utah 2012, Chapter 212


             26           59-5-119 , as last amended by Laws of Utah 2012, Chapter 212
             27           59-5-215 , as last amended by Laws of Utah 2008, Chapter 141
             28     
             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 35A-8-1608 is amended to read:
             31           35A-8-1608. Deposits into fund.
             32          (1) [All money received] Money required to be deposited into the Uintah Basin
             33      Revitalization Fund under Section 59-5-116 shall be deposited [in] into the Uintah Basin
             34      Revitalization Fund [provided that no] if a business or activity fee or tax based on gross
             35      receipts has not been imposed by a county or the Tribe on oil and gas activities.
             36          (2) (a) Nothing in this section prohibits a county from imposing a charge described in
             37      Subsection (1) with respect to any gathering, transmission, or local distribution pipeline in
             38      which the county owns an interest.
             39          (b) Nothing in this section prohibits the Tribe from imposing a charge described in
             40      Subsection (1) with respect to any gathering, transmission, or local distribution pipeline in
             41      which the Tribe owns an interest.
             42          Section 2. Section 51-9-305 is amended to read:
             43           51-9-305. Deposit and credit of certain severance tax revenue.
             44          (1) As used in this section, "aggregate annual revenue" means the aggregate annual
             45      revenue collected in a fiscal year from the taxes imposed under Title 59, Chapter 5, Severance
             46      Tax on Oil, Gas, and Mining, after subtracting the amounts required to be distributed under
             47      Sections 59-5-116 and 59-5-119 .
             48          [(1) (a)] (2) After making the [distributions] deposits of oil and gas severance tax
             49      [revenues] revenue as required under Sections 59-5-116 and 59-5-119 , the Division of Finance
             50      shall make the [distributions] credit required under [Subsections (2) through (5)] Subsection
             51      (3).
             52          [(b) For purposes of this section, revenue collected from severance taxes on oil and gas
             53      imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas, and Mining, does not include
             54      revenue that is distributed under Section 59-5-116 or 59-5-119 .]
             55          [(2) (a) Beginning with fiscal year 2008-09 and ending with fiscal year 2010-11, if
             56      authorized by law, the Division of Finance shall credit to the permanent state trust fund all


             57      revenue collected in a fiscal year from severance taxes on oil and gas imposed under Title 59,
             58      Chapter 5, Severance Tax on Oil, Gas, and Mining, that exceed $71,000,000.]
             59          [(b) Beginning with fiscal year 2011-12, if authorized by law, the Division of Finance
             60      shall credit to the permanent state trust fund all revenue collected in a fiscal year from
             61      severance taxes on oil and gas imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas,
             62      and Mining, that exceed $77,000,000.]
             63          [(3) Beginning with fiscal year 2008-09, if authorized by law, the Division of Finance
             64      shall credit to the permanent state trust fund all revenue collected in a fiscal year from
             65      severance taxes on mining imposed under Title 59, Chapter 5, Severance Tax on Oil, Gas, and
             66      Mining, that exceed $27,600,000.]
             67          (3) Beginning on July 1, 2016, the Division of Finance shall credit to the permanent
             68      state trust fund the following aggregate annual revenue:
             69          (i) 25% of the first $50,000,000 of aggregate annual revenue;
             70          (ii) 50% of the next $50,000,000 of aggregate annual revenue; and
             71          (iii) 75% of the aggregate annual revenue that exceeds $100,000,000.
             72          (4) The state treasurer shall invest and separately account for the earnings on funds that
             73      are [deposited into] credited to the permanent state trust fund under this section.
             74          (5) (a) In accordance with Utah Constitution Article XXII, Section 4, the interest and
             75      dividends earned annually on revenue from severance taxes that are [deposited into] credited to
             76      the permanent state trust fund shall be [deposited in] credited to the General Fund.
             77          (b) Interest and dividends earned on revenue from severance taxes that are [deposited
             78      in] credited to the General Fund pursuant to Subsection (5)(a) shall be credited to the
             79      Infrastructure and Economic Diversification Investment Account created in Section 51-9-303 .
             80          Section 3. Section 59-5-115 is amended to read:
             81           59-5-115. Disposition of taxes collected -- Credit to General Fund.
             82          [All taxes] Except as provided in Section 51-9-305 , 59-5-116 , or 59-5-119 , a tax
             83      imposed and collected under Section 59-5-102 shall be paid to the commission, promptly
             84      remitted to the state treasurer, and [except those taxes otherwise allocated under Section
             85      51-9-305 , 59-5-116 , or 59-5-119 ,] credited to the General Fund.
             86          Section 4. Section 59-5-116 is amended to read:
             87           59-5-116. Disposition of certain taxes collected on Ute Indian land.


             88          (1) Except as provided in Subsection (2), there shall be deposited into the Uintah Basin
             89      Revitalization Fund established in Section 35A-8-1602 :
             90          (a) for taxes imposed under this part, 33% of the taxes collected on oil, gas, or other
             91      hydrocarbon substances produced from a well:
             92          (i) for which production began on or before June 30, 1995; and
             93          (ii) attributable to interests:
             94          (A) held in trust by the United States for the Tribe and its members; or
             95          (B) on lands identified in Pub. L. No. 440, 62 Stat. 72 (1948);
             96          (b) for taxes imposed under this part, 80% of taxes collected on oil, gas, or other
             97      hydrocarbon substances produced from a well:
             98          (i) for which production began on or after July 1, 1995; and
             99          (ii) attributable to interests:
             100          (A) held in trust by the United States for the Tribe and its members; or
             101          (B) on lands identified in Pub. L. No. 440, 62 Stat. 72 (1948); and
             102          (c) for taxes imposed under this part, 80% of taxes collected on oil, gas, or other
             103      hydrocarbon substances produced from a well:
             104          (i) for which production began on or after January 1, 2001; and
             105          (ii) attributable to interests on lands conveyed to the tribe under the Ute-Moab Land
             106      Restoration Act, Pub. L. No. 106-398, Sec. 3303.
             107          (2) (a) The maximum amount deposited in the Uintah Basin Revitalization Fund may
             108      not exceed:
             109          (i) $3,000,000 in fiscal year 2005-06;
             110          (ii) $5,000,000 in fiscal year 2006-07;
             111          (iii) $6,000,000 in fiscal years 2007-08 and 2008-09; and
             112          (iv) for fiscal years beginning with fiscal year 2009-10, the amount determined by the
             113      commission as described in Subsection (2)(b).
             114          (b) (i) The commission shall increase or decrease the dollar amount described in
             115      Subsection (2)(a)(iii) by a percentage equal to the percentage difference between the consumer
             116      price index for the preceding calendar year and the consumer price index for calendar year
             117      2008; and
             118          (ii) after making an increase or decrease under Subsection (2)(b)(i), round the dollar


             119      amount to the nearest whole dollar.
             120          (c) For purposes of this Subsection (2), "consumer price index" is as described in
             121      Section 1(f)(4), Internal Revenue Code, and defined in Section (1)(f)(5), Internal Revenue
             122      Code.
             123          (d) Any amounts in excess of the maximum described in Subsection (2)(a) shall be
             124      [deposited into the General Fund] credited as provided in Sections 51-9-305 and 59-5-115 .
             125          Section 5. Section 59-5-119 is amended to read:
             126           59-5-119. Disposition of certain taxes collected on Navajo Nation land located in
             127      Utah.
             128          (1) Except as provided in Subsection (2), there shall be deposited into the Navajo
             129      Revitalization Fund established in Section 35A-8-1704 for taxes imposed under this part
             130      beginning on July 1, 1997:
             131          (a) 33% of the taxes collected on oil, gas, or other hydrocarbon substances produced
             132      from a well:
             133          (i) for which production began on or before June 30, 1996; and
             134          (ii) attributable to interests in Utah held in trust by the United States for the Navajo
             135      Nation and its members; and
             136          (b) 80% of the taxes collected on oil, gas, or other hydrocarbon substances produced
             137      from a well:
             138          (i) for which production began on or after July 1, 1996; and
             139          (ii) attributable to interests in Utah held in trust by the United States for the Navajo
             140      Nation and its members.
             141          (2) (a) The maximum amount deposited in the Navajo Revitalization Fund may not
             142      exceed:
             143          (i) $2,000,000 in fiscal year 2006-07; and
             144          (ii) $3,000,000 for fiscal years beginning with fiscal year 2007-08.
             145          (b) Any amounts in excess of the maximum described in Subsection (2)(a) shall be
             146      [deposited into the General Fund] credited as provided in Sections 51-9-305 and 59-5-115 .
             147          Section 6. Section 59-5-215 is amended to read:
             148           59-5-215. Disposition of taxes collected -- Credit to General Fund.
             149          [All taxes] Except as provided in Section 51-9-305 , a tax imposed and collected under


             150      Section 59-5-202 shall be paid to the commission, promptly remitted to the state treasurer, and
             151      [except those taxes otherwise allocated under Section 51-9-305 ,] credited to the General Fund.


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