Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                              S.B. 245
Approved for Filing: A.V. Arthur 6                           2nd Sub. (Salmon)
          6 02-26-24 3:00 PM 6
                           Senator Lincoln Fillmore proposes the following substitute bill:
                       COUNTY SALES AND USE TAX AMENDMENTS
                                         2024 GENERAL SESSION
                                             STATE OF UTAH
                                  Chief Sponsor: Lincoln Fillmore
                                 House Sponsor: Jordan D. Teuscher
 6
 LONG TITLE
 General Description:
          This bill modifies distribution provisions of the County Option Funding for Botanical,
 Cultural, Recreational, and Zoological Organizations or Facilities.
 Highlighted Provisions:
          This bill:
          < revises the distribution of 16% of the revenue from the county botanical, cultural,
 recreational, and zoological organizations or facilities tax in a county of the first
 class.
 Money Appropriated in this Bill:
          None
 Other Special Clauses:
          This bill provides a special effective date.
 Utah Code Sections Affected:                                                                      2nd Sub. S.B. 245
 AMENDS:
          59-12-702, as last amended by Laws of Utah 2017, Chapter 382
          59-12-704, as last amended by Laws of Utah 2021, Chapter 396
24
 Be it enacted by the Legislature of the state of Utah:
     *SB0245S02*
       2nd Sub. (Salmon) S.B. 245                                                  02-26-24 3:00 PM
         Section 1. Section 59-12-702 is amended to read:
         59-12-702. Definitions.
         As used in this part:
         (1) "Administrative unit" means a division of a private nonprofit organization or
 institution that:
         (a) would, if it were a separate entity, be a botanical organization or cultural
 organization; and
         (b) consistently maintains books and records separate from those of [its] the
 administrative unit's parent organization.
         (2) "Aquarium" means a park or building where a collection of water animals and
 plants is kept for study, conservation, and public exhibition.
         (3) "Aviary" means a park or building where a collection of birds is kept for study,
 conservation, and public exhibition.
         (4) "Botanical organization" means:
         (a) a private nonprofit organization or institution having as [its] the private nonprofit
 organization's or institution's primary purpose the advancement and preservation of plant
 science through horticultural display, botanical research, and community education; or
         (b) an administrative unit.
         (5) (a) "Certified audit" means an opinion, provided in conformity with generally
 accepted accounting principles, from a Utah licensed certified public accounting firm that the
 overall financial statements of an organization fairly represent the financial position of the
 organization.
         (b) "Certified audit" includes any disclosure required by generally accepted accounting
 principles.
         [(5)] (6) "Cultural facility" means the same as that term is defined in Section
 59-12-602.
         [(6)] (7) (a) "Cultural organization" means:
         [(i) means:]
         [(A)] (i) a private nonprofit organization or institution having as [its] the private
 nonprofit organization's or institution's primary purpose the advancement and preservation of:
         [(I)] (A) natural history;
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       02-26-24 3:00 PM                                                 2nd Sub. (Salmon) S.B. 245
         [(II)] (B) art;
         [(III)] (C) music;
         [(IV)] (D) theater;
         [(V)] (E) dance; or
         [(VI)] (F) cultural arts, including literature, a motion picture, or storytelling; and
         [(B)] (ii) an administrative unit[; and].
         [(ii)] (b) "Cultural organization" includes, for purposes of Subsections 59-12-704(1)(d)
 and [(6)] (10) only:
         [(A)] (i) a private nonprofit organization or institution having as [its] the private
 nonprofit organization's or institution's primary purpose the advancement and preservation of
 history; or
         [(B)] (ii) a municipal or county cultural council having as [its] the municipal or county
 cultural council's primary purpose the advancement and preservation of:
         [(I)] (A) history;
         [(II)] (B) natural history;
         [(III)] (C) art;
         [(IV)] (D) music;
         [(V)] (E) theater; or
         [(VI)] (F) dance.
         [(b)] (c) "Cultural organization" does not include:
         (i) an agency of the state;
         (ii) except as provided in Subsection [(6)(a)(ii)(B)] (7)(b)(ii), a political subdivision of
 the state;
         (iii) an educational institution [whose annual revenues are] for which annual revenue is
 directly derived more than 50% from state funds; or
         (iv) in a county of the first or second class, a radio or television broadcasting network
 or station, cable communications system, newspaper, or magazine.
         [(7)] (8) "Institution" means an institution of higher education listed in Subsection
 53B-1-102(1)(a).
         (9) "Non-qualifying expenditures" means:
         (a) a capital construction expense, including a capital acquisition, an improvement to
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        2nd Sub. (Salmon) S.B. 245                                                 02-26-24 3:00 PM
 real property, or depreciation of real property;
        (b) a payment into an endowment corpus;
        (c) an expenditure for programs conducted outside of the county in which the
 organization is located;
        (d) a fundraising expense related to a capital or an endowment campaign;
        (e) repayment of a loan or interest on the loan;
        (f) rent payments in excess of 6% of total operating expenses;
        (g) all non-cash expenditures including in-kind services and products, all trades,
 exchange transactions, or other similar non-cash consideration;
        (h) an expenditure for direct political lobbying;
        (i) salary expenditures in excess of $95,000, adjusted for inflation as determined by the
 advisory board, per staff member for all functions:
        (i) including bonuses and any other compensation for services rendered; and
        (ii) excluding retirement, health, social security or Medicare benefits;
        (j) a grant or a fiscal sponsorship distributed to an outside group, institution,
 organization, or other unit;
        (k) gift shop and concession expenses, including inventory or related expenses that do
 not meet the requirements of Subsection (10)(b)(ii);
        (l) a bad debt expense;
        (m) depreciation and amortization of an asset;
        (n) more than $500 in non-deductible tax penalty, including a federal and state
 employment tax penalty;
        (o) an expense related to unrelated business income activities or that is used in
 calculating federal unrelated business income tax;
        (p) funding under this part allocated in the previous year regardless of whether the
 organization expended the funds in the previous year;
        (q) related party transactions; and
        (r) another expense not related to the organization's primary purpose.
        (10) (a) "Operating expenses" means an organization's total expenditures for ongoing
 operations for a fiscal year as documented by official certified audit records minus
 non-qualifying expenditures.
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        02-26-24 3:00 PM                                                 2nd Sub. (Salmon) S.B. 245
         (b) "Operating expenses" includes:
         (i) property taxes paid to the county; and
         (ii) inventory or related expenses that are:
         (A) classified as costs of goods;
         (B) sold; and
         (C) combined, less than 10% of total operating expenses.
         [(8)] (11) "Recreational facility" means a publicly owned or operated park,
 campground, marina, dock, golf course, playground, athletic field, gymnasium, swimming
 pool, trail system, or other facility used for recreational purposes.
         (12) "Related party transaction" means a transaction with any board member, staff
 member, or a board or staff member's affiliates or family members that is more than $5,000 and
 is disallowed by the advisory board after considering:
         (a) whether the organization certifies that the organization has adopted the Utah
 Nonprofit Association Standard of Ethics and satisfies Part III (B) of the standards;
         (b) whether the organization complied with the standards in approving the transaction,
 including rejecting any transaction that is not fair to the organization; and
         (c) the content of the minutes from the organization board meeting where the
 disclosure was made and the details of the transaction and accompanying analysis as set forth
 in the disclosure to the organization's board.
         [(9)] (13) "Rural radio station" means a nonprofit radio station based in a county of the
 third, fourth, fifth, or sixth class.
         [(10)] (14) In a county of the first class, "zoological facility" means a public,
 public-private partnership, or private nonprofit building, exhibit, utility and infrastructure,
 walkway, pathway, roadway, office, administration facility, public service facility, educational
 facility, enclosure, public viewing area, animal barrier, animal housing, animal care facility,
 and veterinary and hospital facility related to the advancement, exhibition, or preservation of a
 mammal, bird, reptile, fish, or an amphibian.
         [(11)] (15) (a) (i) Except as provided in Subsection [(11)(a)(ii)] (15)(a)(ii), "zoological
 organization" means a public, public-private partnership, or private nonprofit organization
 having as its primary purpose the advancement and preservation of zoology.
         (ii) In a county of the first class, "zoological organization" means a nonprofit
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        2nd Sub. (Salmon) S.B. 245                                                    02-26-24 3:00 PM
 organization having as [its] nonprofit organization's primary purpose the advancement and
 exhibition of a mammal, bird, reptile, fish, or an amphibian to an audience of 75,000 or more
 persons annually.
         (b) "Zoological organization" does not include an agency of the state, educational
 institution, radio or television broadcasting network or station, cable communications system,
 newspaper, or magazine.
         [(12)] (16) "Zoological park" means a park or garden where a collection of wild
 animals is kept for study, conservation, and public exhibition.
         Section 2. Section 59-12-704 is amended to read:
         59-12-704. Distribution of revenue -- Advisory board creation -- Determining
 operating expenses -- Administrative charge.
         (1) Except as provided in Subsections [(3)(b)] (7)(b) and [(5)] (9), and subject to the
 requirements of this section, [any revenues collected by a county of the first class under this
 part shall be distributed annually by the county legislative body] the county legislative body of
 a county of the first class shall distribute annually any revenue collected under this part to
 support cultural facilities, recreational facilities, and zoological facilities and botanical
 organizations, cultural organizations, and zoological organizations within that first class county
 as follows:
         [(a) 30% of the revenue collected by the county under this section shall be distributed
 by the county legislative body to support cultural facilities and recreational facilities located
 within the county;]
         [(b) (i) subject to Subsection (1)(b)(ii) and except as provided in Subsection (1)(b)(iii),
 16% of the revenue collected by the county under this section shall be distributed by the county
 legislative body to support no more than three zoological facilities and zoological organizations
 located within the county, having average annual operating expenses of $1,500,000 or more as
 determined under Subsection (3), with:]
         [(A) 63.5% of that revenue being distributed to support a zoological organization
 having as its primary purpose the operation of a zoological park, or a zoological facility that is
 part of or integrated with a zoological park;]
         [(B) 28.25% of that revenue being distributed to support a zoological organization
 having as its primary purpose the operation of an aquarium, or a zoological facility that is part
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        02-26-24 3:00 PM                                                2nd Sub. (Salmon) S.B. 245
 of or integrated with an aquarium; and]
        [(C) 8.25% of that revenue being distributed to support a zoological organization
 having as its primary purpose the operation of an aviary, or a zoological facility that is part of
 or integrated with an aviary;]
        [(ii) if more than one zoological organization or zoological facility qualifies to receive
 the money described in Subsection (1)(b)(i)(A), (B), or (C), the county legislative body shall
 distribute the money described in the subsection for which more than one zoological
 organization or zoological facility qualifies to whichever zoological organization or zoological
 facility the county legislative body determines is most appropriate, except that a zoological
 organization or zoological facility may not receive money under more than one subsection
 under Subsection (1)(b)(i); and]
        [(iii) if no zoological organization or zoological facility qualifies to receive money
 described in Subsection (1)(b)(i)(A), (B), or (C), the county legislative body shall distribute the
 money described in the subsection for which no zoological organization or zoological facility
 qualifies among the zoological organizations or zoological facilities qualifying for and
 receiving money under the other subsections in proportion to the zoological organizations' or
 zoological facilities' average annual operating expenses as determined under Subsection (3);]
        [(c) (i) 45% of the revenue collected by the county under this section shall be
 distributed to no more than 22 botanical organizations and cultural organizations:]
        [(A) each of which has average annual operating expenses of more than $250,000 as
 determined under Subsection (3); and]
        [(B) whose activities impact all or a significant region of the county or state;]
        [(ii) subject to Subsection (1)(c)(iii), the county legislative body shall distribute the
 money described in Subsection (1)(c)(i) among the botanical organizations and cultural
 organizations in proportion to their average annual operating expenses as determined under
 Subsection (3); and]
        [(iii) the amount distributed to any botanical organization or cultural organization
 described in Subsection (1)(c)(i) may not exceed 35% of the botanical organization's or cultural
 organization's operating budget; and]
        [(d) (i) 9% of the revenue collected by the county under this section shall be distributed
 to botanical organizations and cultural organizations that do not receive revenue under
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        2nd Sub. (Salmon) S.B. 245                                                   02-26-24 3:00 PM
 Subsection (1)(c)(i) in communities throughout the county; and]
        [(ii) the county legislative body shall determine how the money shall be distributed
 among the botanical organizations and cultural organizations described in Subsection (1)(d)(i).]
        (a) 30% of the revenue to support cultural facilities and recreational facilities located
 within the county;
        (b) 16% of the revenue to support zoological facilities and zoological organizations
 located within the county as provided in Subsection (2);
        (c) as provided in Subsection (5), 45% of the revenue to support no more than 22
 botanical organizations and cultural organizations:
        (i) each of which has average annual operating expenses of more than $250,000 as
 determined under Subsection (7); and
        (ii) whose activities impact all or a significant region of the county or state; and
        (d) 9% of the revenue to botanical organizations and cultural organizations that do not
 receive revenue under Subsection (1)(c) in communities throughout the county as determined
 by the county legislative body.
        (2) (a) The distribution described in Subsection (1)(b) shall support no more than three
 zoological facilities and zoological organizations located within the county and having average
 annual operating expenses of $1,500,000 or more as determined under Subsection (7).
        (b) For the calendar years that begin on or after January 1, 2025, and on or before
 January 1, 2029, the county shall distribute the 16% of the revenue as follows:
        (i) 8.25% of the revenue to support a zoological organization having as the zoological
 organization's primary purpose the operation of an aviary, or a zoological facility that is part of
 or integrated with an aviary;