Residents of Utah cities could get a Christmas bonus from their city government.
A bill to return up to $20 million in municipal franchise taxes on natural gas passed a House committee unanimously Friday afternoon after receiving a hearty endorsement from all sides of the issue. Those endorsements of HB309 — which included the Utah League of Cities and Towns, Questar Gas and the Committee of Consumer Services — practically guarantee that the bill will face little opposition as it moves through the Legislature.
What is now considered a consensus bill was not originally so. Before being substituted Friday, HB309 proposed to "significantly change" the way cities tax natural gas, said league lobbyist Roger Tew, by requiring them to tax based on decatherm usage instead of a percentage of the bill.
The compromise bill addresses the main purpose of the first version of HB309 by preventing cities from pocketing a windfall because of rapidly escalating gas prices, Tew said. It is estimated that cities could see as much as a 33 percent jump in those revenues this year.
"There was never a desire on the part of cities to get a windfall," he said.
With first substitute HB309, the cities will be allowed to keep the previous fiscal year's natural gas tax revenues, plus 10 percent to "cover the costs of growth," Tew said. Any increase above the 10 percent will be returned to city residents in the form of a credit on a gas bill next December or January to help offset expected high heating bills.
The 10 percent cap will be in place for fiscal year 2006, which ends June 30, and fiscal year 2007. During that time, legislators will look at ways to permanently ensure that cities do not receive big tax revenue surpluses because of jumps in utility prices.
Rep. Sheryl Allen, R-Bountiful, said that the fix was a good way to address the immediate problem, and provide municipal gas customers a small break on the heating costs. She hoped that the time would be used wisely by cities and utilities, since she doubted that the costs for home heating would improve.
"I don't think anybody anticipates that gas prices are going to drop significantly," she said. "I think this is a good temporary solution, and the two-year study period will be very important."