Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                             H.B. 509
Approved for Filing: C.R. Gilbert 6                             1st Sub. (Buff)
          6 02-15-24 8:04 PM 6
                      Representative Joseph Elison proposes the following substitute bill:
                      STATE SOVEREIGNTY PERMANENT FUND
                                      2024 GENERAL SESSION
                                          STATE OF UTAH
                                 Chief Sponsor: Joseph Elison
                                 Senate Sponsor: ____________
 6
 LONG TITLE
 General Description:
         This bill creates the State Sovereignty Permanent Fund.
 Highlighted Provisions:
         This bill:
         < defines terms;
         < creates the State Sovereignty Permanent Fund; and
         < provides for the investment and distribution of the State Sovereignty Permanent
 Fund.
 Money Appropriated in this Bill:
         None
 Other Special Clauses:
         None
 Utah Code Sections Affected:                                                                1st Sub. H.B. 509
 AMENDS:
         51-7-2, as last amended by Laws of Utah 2023, Chapters 139, 242 and 328
 ENACTS:
         51-12-101, Utah Code Annotated 1953
         51-12-102, Utah Code Annotated 1953
     *HB0509S01*
       1st Sub. (Buff) H.B. 509                                                02-15-24 8:04 PM
        51-12-103, Utah Code Annotated 1953
27
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 51-7-2 is amended to read:
        51-7-2. Exemptions from chapter.
        (1) Except as provided in Subsection (2), the following funds are exempt from this
 chapter:
        (a) funds invested in accordance with the participating employees' designation or
 direction pursuant to a public employees' deferred compensation plan established and operated
 in compliance with Section 457 of the Internal Revenue Code of 1986, as amended;
        (b) funds of the Utah State Retirement Board;
        (c) funds of the Utah Housing Corporation;
        (d) endowment funds of higher education institutions, including funds of the Higher
 Education Student Success Endowment, created in Section 53B-7-802;
        (e) permanent and other land grant trust funds established pursuant to the Utah
 Enabling Act and the Utah Constitution;
        (f) the State Post-Retirement Benefits Trust Fund;
        (g) the funds of the Utah Educational Savings Plan;
        (h) funds of the permanent state trust fund created by and operated under Utah
 Constitution, Article XXII, Section 4;
        (i) the funds in the Navajo Trust Fund;
        (j) the funds in the Radioactive Waste Perpetual Care and Maintenance Account;
        (k) the funds in the Employers' Reinsurance Fund;
        (l) the funds in the Uninsured Employers' Fund;
        (m) the Utah State Developmental Center Long-Term Sustainability Fund, created in
 Section 26B-1-331;
        (n) the funds in the Risk Management Fund created in Section 63A-4-201; [and]
        (o) the Utah fund of funds created in Section 63N-6-401; and
        (p) the State Sovereignty Permanent Fund created in Section 51-12-102.
        (2) Except for the funds of the Utah State Retirement Board and the Utah Educational
 Savings Plan, the funds described in Subsection (1) are not exempt from Subsections
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       02-15-24 8:04 PM                                                     1st Sub. (Buff) H.B. 509
 51-7-14(2) and (3).
        Section 2. Section 51-12-101 is enacted to read:
                   CHAPTER 12. STATE SOVEREIGNTY PERMANENT FUND
        51-12-101. Definitions.
        As used in this chapter:
        (1) "Division" means the Division of Finance created in Section 63A-3-101.
        (2) (a) "Principal" means money deposited into the State Sovereignty Permanent Fund
 in accordance with Section 51-12-102.
        (b) "Principal" does not include interest earned on any money in the State Sovereignty
 Permanent Fund.
        (3) "Revenue growth" means the difference between, as determined by the Office of
 the Legislative Fiscal Analyst:
        (a) the estimated amount of ongoing General Fund and Income Tax Fund revenue
 available for the Legislature to appropriate for the next fiscal year; and
        (b) the amount of ongoing appropriations from the General Fund and the Income Tax
 Fund in the current fiscal year.
        Section 3. Section 51-12-102 is enacted to read:
        51-12-102. State Sovereignty Permanent Fund -- Creation -- Distribution.
        (1) There is created the State Sovereignty Permanent Fund which consists of:
        (a) revenue growth appropriated in accordance with the formula described in
 Subsection (2);
        (b) subject to Subsection (5), interest earned on any money in the State Sovereignty
 Permanent Fund; and
        (c) additional money appropriated by the Legislature.
        (2) Beginning on July 1, 2025, the Legislature shall annually appropriate revenue
 growth for the next fiscal year into the State Sovereignty Permanent Fund as follows:
        (a) 1% of revenue growth in year one;
        (b) in each of the following eight fiscal years, a percentage equal to the percentage
 deposited the immediately preceding fiscal year, plus an additional 1% of revenue growth; and
        (c) 10% of revenue growth in year 10 and each fiscal year thereafter.
        (3) The division shall track the amount of revenue growth appropriated to the State
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        1st Sub. (Buff) H.B. 509                                                   02-15-24 8:04 PM
 Sovereignty Permanent Fund from the General Fund and Income Tax Fund, respectively.
         (4) If there is insufficient revenue growth to comply with Subsection (2), the
 Legislature shall appropriate to the State Sovereignty Permanent Fund any revenue growth that
 remains available after any constitutional and statutory deposit requirements created before
 July 1, 2025, are fulfilled.
         (5) The state treasurer shall:
         (a) (i) hold all money described in Subsection (1); and
         (ii) in accordance with Section 51-12-103, invest the money for the benefit of the
 people of the state in perpetuity; and
         (b) distribute annually to the division the earnings from the investment of the State
 Sovereignty Permanent Fund as follows:
         (i) before July 1, 2040, 100% into the State Sovereignty Permanent Fund; and
         (ii) after July 1, 2040:
         (A) 50% into the General Fund or Income Tax Fund; and
         (B) 50% into the State Sovereignty Permanent Fund.
         (6) The Legislature may appropriate all or a portion of the State Sovereignty Permanent
 Fund principal only by the affirmative vote of two-thirds of all the members elected to each
 chamber of the Legislature.
         Section 4. Section 51-12-103 is enacted to read:
         51-12-103. State Sovereignty Permanent Fund -- Investment.
         (1) The state treasurer shall:
         (a) invest money in the State Sovereignty Permanent Fund with the goals of, in order of
 priority:
         (i) providing for growth of the principal; and
         (ii) fund stability;
         (b) invest and manage the State Sovereignty Permanent Fund assets as a prudent
 investor would by:
         (i) considering the purpose, terms, distribution requirements, and other circumstances
 of the State Sovereignty Permanent Fund; and
         (ii) exercising reasonable care, skill, and caution in order to meet the standard of care
 of a prudent investor; and
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        02-15-24 8:04 PM                                                      1st Sub. (Buff) H.B. 509
        (c) deposit the interest or other revenue earned from the investment of the State
 Sovereignty Permanent Fund in accordance with Section 51-12-102.
        (2) Nothing in this section requires a specific outcome in investing.
        (3) In determining whether the state treasurer has met the standard of care of a prudent
 investor under Subsection (1), the judge or finder of fact shall:
        (a) consider the state treasurer's actions in light of the facts and circumstances existing
 at the time of the investment decision or action, and not by hindsight; and
        (b) evaluate the state treasurer's investment and management decisions respecting
 individual assets not in isolation, but in context of a whole portfolio that is part of an overall
 investment strategy that has risk and return objectives reasonably suited to the State
 Sovereignty Permanent Fund.
        (4) The state treasurer may:
        (a) before distributing any earnings under Section 51-12-102, deduct from the earnings
 any administrative costs incurred in managing State Sovereignty Permanent Fund assets;
        (b) employ professional asset managers to assist in the investment of State Sovereignty
 Permanent Fund assets; and
        (c) provide compensation to asset managers only from earnings generated by the State
 Sovereignty Permanent Fund's investments.
        Section 5. Effective date.
        This bill takes effect on May 1, 2024.
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Statutes affected: 
H.B. 509 1st Substitute (Not Adopted) Text: 51-7-2