02-07 12:09 S.B. 37
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Minimum Basic Tax Rate Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Lincoln Fillmore
House Sponsor: Val L. Peterson
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LONG TITLE
Ŝ→ [Committee Note:
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The Revenue and Taxation Interim Committee recommended this bill.
6 Legislative Vote:12 voting for2 voting against4 absent] ←Ŝ
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General Description:
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This bill amends provisions related to the minimum basic tax that school districts impose.
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Highlighted Provisions:
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This bill:
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▸ ensures state funding in an amount that covers the total cost of the basic school program
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for a school district that imposes the combined minimum basic tax rate;
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▸ requires school districts that impose the combined minimum basic tax to remit to the state
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the revenue the tax generates;
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▸ repeals provisions regarding state and local contributions toward the basic school
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program; and
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▸ makes technical and conforming changes.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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11-13-302, as last amended by Laws of Utah 2023, Chapter 7
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53F-2-205, as last amended by Laws of Utah 2023, Chapter 7
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53F-2-301, as last amended by Laws of Utah 2024, Chapters 124, 460
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53F-2-515, as last amended by Laws of Utah 2023, Chapter 7
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59-2-902, as last amended by Laws of Utah 1993, Chapters 4, 227
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Be it enacted by the Legislature of the state of Utah:
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Section 12. Section 11-13-302 is amended to read:
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11-13-302 . Payment of fee in lieu of ad valorem property tax by certain energy
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suppliers -- Method of calculating -- Collection -- Extent of tax lien.
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(1)(a) Each project entity created under this chapter that owns a project and that sells
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any capacity, service, or other benefit from it to an energy supplier or suppliers
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whose tangible property is not exempted by Utah Constitution Article XIII, Section
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3, from the payment of ad valorem property tax, shall pay an annual fee in lieu of ad
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valorem property tax as provided in this section to each taxing jurisdiction within
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which the project or any part of it is located.
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(b) For purposes of this section, "annual fee" means the annual fee described in
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Subsection (1)(a) that is in lieu of ad valorem property tax.
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(c) The requirement to pay an annual fee shall commence:
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(i) with respect to each taxing jurisdiction that is a candidate receiving the benefit of
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impact alleviation payments under contracts or determination orders provided for
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in Sections 11-13-305 and 11-13-306, with the fiscal year of the candidate
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following the fiscal year of the candidate in which the date of commercial
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operation of the last generating unit, other than any generating unit providing
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additional project capacity, of the project occurs, or, in the case of any facilities
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providing additional project capacity, with the fiscal year of the candidate
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following the fiscal year of the candidate in which the date of commercial
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operation of the generating unit providing the additional project capacity occurs;
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and
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(ii) with respect to any taxing jurisdiction other than a taxing jurisdiction described in
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Subsection (1)(c)(i), with the fiscal year of the taxing jurisdiction in which
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construction of the project commences, or, in the case of facilities providing
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additional project capacity, with the fiscal year of the taxing jurisdiction in which
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construction of those facilities commences.
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(d) The requirement to pay an annual fee shall continue for the period of the useful life
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of the project or facilities.
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(2)(a) The annual fees due a school district shall be as provided in Subsection (2)(b)
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because the ad valorem property tax imposed by a school district and authorized by
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the Legislature represents both:
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(i) a levy [mandated by ]the state mandates as a condition of receiving state funding
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for the state minimum school program under Section 53F-2-301; and
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(ii) local levies for capital outlay and other purposes under Sections 53F-8-303,
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53F-8-301, and 53F-8-302.
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(b) The annual fees due a school district shall be as follows:
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(i) the project entity shall pay to the [school district] state an annual fee for the state
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minimum school program at the rate imposed by the school district and authorized
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by the Legislature under Section 53F-2-301; and
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(ii) for all other local property tax levies authorized to be imposed by a school
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district, the project entity shall pay to the school district either:
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(A) an annual fee; or
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(B) impact alleviation payments under contracts or determination orders provided
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for in Sections 11-13-305 and 11-13-306.
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(3)(a) An annual fee due a taxing jurisdiction for a particular year shall be calculated by
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multiplying the tax rate or rates of the jurisdiction for that year by the product
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obtained by multiplying the fee base or value determined in accordance with
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Subsection (4) for that year of the portion of the project located within the
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jurisdiction by the percentage of the project which is used to produce the capacity,
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service, or other benefit sold to the energy supplier or suppliers.
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(b) As used in this section, "tax rate," when applied in respect to a school district,
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includes any assessment to be made by the school district under Subsection (2) or
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Section 63M-5-302.
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(c) There is to be credited against the annual fee due a taxing jurisdiction for each year,
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an amount equal to the debt service, if any, payable in that year by the project entity
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on bonds, the proceeds of which were used to provide public facilities and services
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for impact alleviation in the taxing jurisdiction in accordance with Sections 11-13-305
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and 11-13-306.
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(d) The tax rate for the taxing jurisdiction for that year shall be computed so as to:
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(i) take into account the fee base or value of the percentage of the project located
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within the taxing jurisdiction determined in accordance with Subsection (4) used
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to produce the capacity, service, or other benefit sold to the supplier or suppliers;
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and
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(ii) reflect any credit to be given in that year.
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(4)(a) Except as otherwise provided in this section, the annual fees required by this
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section shall be paid, collected, and distributed to the taxing jurisdiction as if:
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(i) the annual fees were ad valorem property taxes; and
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(ii) the project were assessed at the same rate and upon the same measure of value as
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taxable property in the state.
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(b)(i) Notwithstanding Subsection (4)(a), for purposes of an annual fee required by
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this section, the fee base of a project may be determined in accordance with an
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agreement among:
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(A) the project entity; and
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(B) any county that:
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(I) is due an annual fee from the project entity; and
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(II) agrees to have the fee base of the project determined in accordance with the
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agreement described in this Subsection (4).
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(ii) The agreement described in Subsection (4)(b)(i):
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(A) shall specify each year for which the fee base determined by the agreement
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shall be used for purposes of an annual fee; and
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(B) may not modify any provision of this chapter except the method by which the
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fee base of a project is determined for purposes of an annual fee.
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(iii) For purposes of an annual fee imposed by a taxing jurisdiction within a county
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described in Subsection (4)(b)(i)(B), the fee base determined by the agreement
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described in Subsection (4)(b)(i) shall be used for purposes of an annual fee
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imposed by that taxing jurisdiction.
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(iv)(A) If there is not agreement as to the fee base of a portion of a project for any
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year, for purposes of an annual fee, the State Tax Commission shall determine
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the value of that portion of the project for which there is not an agreement:
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(I) for that year; and
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(II) using the same measure of value as is used for taxable property in the state.
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(B) The valuation required by Subsection (4)(b)(iv)(A) shall be made by the State
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Tax Commission in accordance with rules made by the State Tax Commission.
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(c) Payments of the annual fees shall be made from:
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(i) the proceeds of bonds issued for the project; and
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(ii) revenues derived by the project entity from the project.
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(d)(i) The contracts of the project entity with the purchasers of the capacity, service,
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or other benefits of the project whose tangible property is not exempted by Utah
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Constitution Article XIII, Section 3, from the payment of ad valorem property tax
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shall require each purchaser, whether or not located in the state, to pay, to the
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extent not otherwise provided for, its share, determined in accordance with the
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terms of the contract, of these fees.
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(ii) It is the responsibility of the project entity to enforce the obligations of the
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purchasers.
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(5)(a) The responsibility of the project entity to make payment of the annual fees is
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limited to the extent that there is legally available to the project entity, from bond
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proceeds or revenues, money to make these payments, and the obligation to make
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payments of the annual fees is not otherwise a general obligation or liability of the
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project entity.
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(b) No tax lien may attach upon any property or money of the project entity by virtue of
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any failure to pay all or any part of an annual fee.
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(c) The project entity or any purchaser may contest the validity of an annual fee to the
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same extent as if the payment was a payment of the ad valorem property tax itself.
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(d) The payments of an annual fee shall be reduced to the extent that any contest is
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successful.
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(6)(a) The annual fee described in Subsection (1):
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(i) shall be paid by a public agency that:
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(A) is not a project entity; and
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(B) owns an interest in a facility providing additional project capacity if the
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interest is otherwise exempt from taxation pursuant to Utah Constitution,
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Article XIII, Section 3; and
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(ii) for a public agency described in Subsection (6)(a)(i), shall be calculated in
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accordance with Subsection (6)(b).
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(b) The annual fee required under Subsection (6)(a) shall be an amount equal to the tax
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rate or rates of the applicable taxing jurisdiction multiplied by the product of the
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following:
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(i) the fee base or value of the facility providing additional project capacity located
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within the jurisdiction;
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(ii) the percentage of the ownership interest of the public agency in the facility; and
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(iii) the portion, expressed as a percentage, of the public agency's ownership interest
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that is attributable to the capacity, service, or other benefit from the facility that is
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sold, including any subsequent sale, resale, or layoff, by the public agency to an
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energy supplier or suppliers whose tangible property is not exempted by Utah
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Constitution, Article XIII, Section 3, from the payment of ad valorem property tax.
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(c) A public agency paying the annual fee pursuant to Subsection (6)(a) shall have the
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obligations, credits, rights, and protections set forth in Subsections (1) through (5)
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with respect to its ownership interest as though it were a project entity.
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(d) On or before March 1 of each year, a project entity that owns a project and that
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provides any capacity, service, or other benefit to an energy supplier or a public
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agency shall file an electronic report with the State Tax Commission that identifies:
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(i) each energy supplier and public agency to which the project entity delivers
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capacity, service, or other benefit; and
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(ii) the amount of capacity, service, or other benefit delivered to each energy supplier
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and public agency.
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Section 8. Section 53F-2-205 is amended to read:
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53F-2-205 . Powers and duties of state board to adjust Minimum School
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Program allocations -- Use of remaining funds at the end of a fiscal year.
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(1) As used in this section:
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(a) "ESEA" means the Elementary and Secondary Education Act of 1965, 20 U.S.C.
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Sec. 6301 et seq.
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(b) "Program" means a program or allocation funded by a line item appropriation or
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other appropriation designated as:
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(i) Basic Program;
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(ii) Related to Basic Programs;
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(iii) Voted and Board Levy Programs; or
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(iv) Minimum School Program.
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(2) Except as provided in Subsection (3)[ or (5)], if the number of weighted pupil units in
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a program is underestimated, the state board shall reduce the value of the weighted pupil
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unit in that program so that the total amount paid for the program does not exceed the
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amount appropriated for the program.
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(3) If the number of weighted pupil units in a program is overestimated, the state board
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shall spend excess money appropriated for the following purposes giving priority to the
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purpose described in Subsection (3)(a):
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(a) to support the value of the weighted pupil unit in a program within the basic
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state-supported school program in which the number of weighted pupil units is
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underestimated;
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(b) to support the state guaranteed local levy increments as defined in Section 53F-2-601,
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if:
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(i) local contributions to the voted local levy program or board local levy program are
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overestimated; or
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(ii) the number of weighted pupil units within school districts qualifying for a
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guarantee is underestimated;
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(c) to support the state supplement to local property taxes allocated to charter schools, if
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the state supplement is less than the amount prescribed by Section 53F-2-704;
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(d) to fund the cost of the salary supplements described in Section 53F-2-504; or
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(e) to support a school district with a loss in student enrollment as provided in Section
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53F-2-207.
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[(4) If local contributions from the minimum basic tax rate imposed under Section
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53F-2-301 are overestimated, the state board shall reduce the value of the weighted pupil
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unit for all programs within the basic state-supported school program so the total state
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contribution to the basic state-supported school program does not exceed the amount of
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state funds appropriated.]
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[(5) If local contributions from the minimum basic tax rate imposed under Section
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53F-2-301 are underestimated, the state board shall:]
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[(a) spend the excess local contributions for the purposes specified in Subsection (3),
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giving priority to supporting the value of the weighted pupil unit in programs within the
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basic state-supported school program in which the number of weighted pupil units is
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underestimated; and]
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[(b) reduce the state contribution to the basic state-supported school program so the total
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cost of the basic state-supported school program does not exceed the total state and local
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funds appropriated to the basic state-supported school program plus the local
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contributions necessary to support the value of the weighted pupil unit in programs
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within the basic state-supported school program in which the number of weighted pupil
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units is underestimated.]
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[(6)] (4) Except as provided in Subsection (3)[ or (5)], the state board shall reduce the state
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guarantee per weighted pupil unit provided under the local levy state guarantee program
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described in Section 53F-2-601, if:
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(a) local contributions to the voted local levy program or board local levy program are
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overestimated; or
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(b) the number of weighted pupil units within school districts qualifying for a guarantee
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is underestimated.
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[(7)] (5) Money appropriated to the state board is nonlapsing, including appropriations to the
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Minimum School Program and all agencies, line items, and programs under the
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jurisdiction of the state board.
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[(8)] (6) The state board shall report actions taken by the state board under this section to the
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Office of the Legislative Fiscal Analyst and the Governor's Office of Planning and
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Budget.
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Section 1. Section 53F-2-301 is amended to read:
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53F-2-301 . Minimum basic tax rate for a fiscal year that begins after July 1,
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2022.
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(1) As used in this section:
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(a) "Basic levy increment rate" means a tax rate that will generate an amount of revenue
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equal to $75,000,000.
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(b) "Combined basic rate" means a rate that is the sum of:
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(i) the minimum basic tax rate; and
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(ii) the WPU value rate.
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(c) "Commission" means the State Tax Commission.
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(d) "Minimum basic local amount" means an amount that is:
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(i) equal to the sum of:
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(A) the school districts' contribution to the basic school program the previous
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fiscal year;
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(B) the amount generated by the basic levy increment rate; and
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(C) the eligible new growth, as defined in Section 59-2-924 and rules of the State
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Tax Commission multiplied by the minimum basic rate; and
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(ii) set annually by the Legislature in Subsection (2)(a).
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(e) "Minimum basic tax rate" means a tax rate certified by the commission that will
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generate an amount of revenue equal to the minimum basic local amount described in
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Subsection (2)(a).
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(f) "Weighted pupil unit value" or "WPU value" means the amount established each year
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in the enacted public education budget that is multiplied by the number of weighted
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pupil units to yield the funding level for the basic school program.
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(g) "WPU value amount" means an amount:
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(i) that is equal to the product of:
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(A) the WPU value increase limit; and
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(B) the percentage share of local revenue to the cost of the basic school program
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in the immediately preceding fiscal year; and
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(ii) set annually by the Legislature in Subsection (3)(a).
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(h) "WPU value increase limit" means the lesser of:
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(i) the total cost to the basic school program to increase the WPU value over the
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WPU value in the prior fiscal year; or
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(ii) the total cost to the basic school program to increase the WPU value by 4% over
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the WPU value in the prior fiscal year.
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(i) "WPU value rate" means a tax rate certified by the commission that will generate an
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amount of revenue equal to the WPU value amount described in Subsection (3)(a).
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(2)(a) The minimum basic local amount for the fiscal year that begins on July 1, 2024,
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is $759,529,000 in revenue statewide.
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(b) The preliminary estimate of the minimum basic tax rate for a fiscal year that begins
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on July 1, 2024, is .001429.
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(3)(a) The WPU value amount for the fiscal year that begins on July 1, 2024, is
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$29,240,600 in revenue statewide.
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(b) The preliminary estimate of the WPU value rate for the fiscal year that begins on
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July 1, 2024, is .000055.
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(4)(a) On or before June 22, the commission shall certify for the year:
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(i) the minimum basic tax rate; and
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(ii) the WPU value rate.
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(b) The estimate of the minimum basic tax rate provided in Subsection (2)(b) and the
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estimate of the WPU value rate provided in Subsection (3)(b) are based on a forecast
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for property values for the next calendar year.
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(c) The certified minimum basic tax rate described in Subsection (4)(a)(i) and the
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certified WPU value rate described in Subsection (4)(a)(ii) are based on property
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values as of January 1 of the current calendar year, except personal property, which is
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based on values from the previous calendar year.
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(5)(a) To qualify for receipt of [the ]state [contribution toward] funding of the basic
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school program and as a school district's contribution toward the cost of the basic
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school program for the school district, [each] a local school board shall impose the
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combined basic rate.
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(b) For a local school board that imposes the combined basic rate:
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(i) the relevant county treasurer shall:
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(A) collect the combined basic rate revenue for all school districts located within
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the county treasurer's county; and
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(B) remit the revenue monthly to the state treasurer; and
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(ii) the state treasurer shall deposit the combined basic rate revenue the state treasurer
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receives from a county treasurer into Ŝ→ [state funds] the General Fund ←Ŝ .
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[(b)] (c)(i) The state is not subject to the notice requirements of Section 59-2-926
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before imposing the tax rates described in this Subsection (5).
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(ii) The state is subject to the notice requirements of Section 59-2-926 if the state
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authorizes a tax rate that exceeds the tax rates described in this Subsection (5).
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(6)[(a)] The state shall [contribute to] ensure that, for each school district [toward]
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described in Subsection (5), an allocation from state funds is at least equivalent to the
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cost of the basic school program in the school district[ an amount of money that is the
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difference between the cost of the school district's basic school program and the sum
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of revenue generated by the school district by the following:] .
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[(i) the combined basic rate; and]
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[(ii) the basic levy increment rate.]
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[(b)(i) If the difference described in Subsection (6)(a) equals or exceeds the cost of the
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basic school program in a school district, no state contribution shall be made to the
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basic school program for the school district.]
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[(ii) The proceeds of the difference described in Subsection (6)(a) that exceed the cost
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of the basic school program shall be paid into the Uniform School Fund as provided
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by law and by the close of the fiscal year in which the proceeds were calculated.]
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(7) Upon appropriation by the Legislature, the Division of Finance shall deposit an amount
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equal to the proceeds generated statewide:
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(a) by the basic levy increment rate into the Minimum Basic Growth Account created in
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Section 53F-9-302; and
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(b) by the WPU value rate into the Teacher and Student Success Account created in
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Section 53F-9-306.
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Section 10. Section 53F-2-515 is amended to read:
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53F-2-515 . Federal Impact Aid Program -- Offset for underestimated allocations
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from the Federal Impact Aid Program.
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(1) In addition to [the revenues received from the levy imposed by a local school board and
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authorized by the Legislature under Section 53F-2-301] funds the Legislature
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appropriates to the basic school program, the Legislature shall provide an amount equal
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to the difference between the school district's anticipated receipts under the entitlement
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for the fiscal year from the Federal Impact Aid Program and the amount the school
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district actually received from this source for the next preceding fiscal year.
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(2) If at the end of a fiscal year the sum of the receipts of a school district from a
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distribution from the Legislature pursuant to Subsection (1) plus the school district's
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allocations from the Federal Impact Aid Program for that fiscal year exceeds the amount
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allocated to the school district from the Federal Impact Aid Program for the next
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preceding fiscal year, the excess funds are carried into the next succeeding fiscal year
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and become in that year a part of the school district's contribution [to] toward the cost of
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the school district's basic program for operation and maintenance under the state
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minimum school finance law.
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(3) During the next succeeding fiscal year described in Subsection (2), the school district's
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required tax rate for the basic program shall be reduced so that the yield from the
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reduced tax rate plus the carryover funds equal the school district's required contribution [
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to] toward the cost of the school district's basic program.
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(4) For the school district of a local school board that is required to reduce the school
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district's basic tax rate under this section, the school district shall receive state minimum
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school program funds as though the reduction in the tax rate had not been made.
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Section 5. Section 59-2-902 is amended to read:
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59-2-902 . Minimum basic tax levy for school districts.
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(1) If any county fails to comply with Section 59-2-704, then this section determines the
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adjustment of the basic school levy for school districts within the county.[ ]
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(2)(a) Before June 15, the commission shall ascertain from the State Board of Education
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the number of weighted pupil units in each school district in the state for the school
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year commencing July 1 of the current calendar year, estimated according to the
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Minimum School Program Act, and the money necessary for the cost of the
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operation and maintenance of the minimum school program of the state for the school
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fiscal year beginning July 1 of the current calendar year.[ ]
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(b) The commission shall then estimate the amounts of all surpluses in the Uniform
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School Fund, as of July 1 of the current calendar year, available for the operation and
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maintenance of the program, and shall estimate the anticipated income to the fund
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available for those purposes for the current school year from all sources, including
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revenues from taxes on income or from taxes on intangible property pursuant to
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Article XIII, Sec. 12, Utah Constitution.
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[(2)] (3)(a) The commission shall then determine for each school district the amount to
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be raised by the minimum basic tax levy as its contribution toward the cost of the
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basic state-supported program, as required by the Minimum School Program Act.
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[(3)] (4) Each county auditor shall be notified by the commission that the minimum basic
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tax levy shall be imposed by the school district, to which shall be added an additional
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amount, if any, due to local undervaluation as provided in this section.[ ]
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(a) The auditor shall inform the county legislative body as to the amount of the levy.[ ]
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(b) The county legislative body shall at the time and in the manner provided by law
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make the levy upon the taxable property in the school district together with further
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levies for school purposes as may be required by each school district to pay the costs
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of programs in excess of the basic state-supported school program.
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[(4)] (5) [If the levy applied under this section raises an amount in excess of the total basic
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state-supported school program for a school district, the excess amount shall be remitted
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by the school district to the State Board of Education to be credited to the Uniform
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School Fund for allocation to school districts to support the basic state-supported school
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program. ]The availability of money shall be considered by the commission in fixing
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the state property levy as provided in the Minimum School Program Act.
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[(5)] (6)(a) If the levy does not raise an amount in excess of an amount equal to the cost
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of the total basic state-supported school program for a district, then the difference
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between the amount which the local levy will raise within the district, and the total
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cost of the basic state-supported school program within the district shall be computed.[
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This difference, if any, shall be apportioned from the Uniform School Fund to each
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school district as the contribution of the state to the basic state-supported school
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program for the district, subject to the following conditions:]
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[(a)] (b)(i) [Before the apportionment is made, the] The commission shall determine if
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the local taxable valuation of any school district is undervalued according to law
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and if so, the dollar amount of the undervaluation.[ ]
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(ii) The dollar amount of the undervaluation shall be multiplied by the district basic
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uniform school levy at 98%.[ ]
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(iii) The resulting dollar amount shall be divided by the current year estimated yield
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of .0002 per dollar of taxable value at 98% based on the district's taxable valuation
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prior to adjusting for undervaluation.
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[(b)] (c)(i) The resulting levy amount shall be added to the required district basic
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uniform levy to determine the combined district basic school levy adjusted for
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undervaluation.[ ]
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(ii) The combined rate of levy shall be certified to the county auditor and employed
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by the auditor and the county legislative body in lieu of the required basic school
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local levy.
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Section 13. Effective Date.
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This bill takes effect on May 7, 2025.
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