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H0121.................................................................by TRAIL
PUBLIC SCHOOLS/HIGHER EDUCATION PLANT FACILITIES - Repeals and amends existing
law to delete the sales tax exemption for utilities and heating materials; and
to provide that the money collected be used for public school facilities and
college and university facilities.
01/24 House intro - 1st rdg - to printing
01/27 Rpt prt - to Rev/Tax
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 121
BY TRAIL
1 AN ACT
2 RELATING TO TAXATION POLICIES AND ASSISTANCE IN FUNDING PUBLIC SCHOOL AND
3 HIGHER EDUCATION PLANT FACILITIES; PROVIDING A SHORT TITLE; PROVIDING A
4 STATEMENT OF LEGISLATIVE INTENT; REPEALING SECTIONS 63-3622F AND 63-3622G,
5 IDAHO CODE; AMENDING SECTION 63-3622D, IDAHO CODE, TO DELETE REFERENCE TO
6 TWO SALES TAX EXEMPTIONS; AMENDING SECTION 63-3622JJ, IDAHO CODE, TO
7 DELETE REFERENCE TO A SALES TAX EXEMPTION; AMENDING SECTION 63-3638,
8 IDAHO CODE, TO PROVIDE FOR REMITTANCE OF MONEYS TO THE SCHOOL DISTRICT
9 BUILDING ACCOUNT AND THE PERMANENT BUILDING FUND FOR A TEN YEAR PERIOD AND
10 TO MAKE TECHNICAL CORRECTIONS; PROVIDING SEVERABILITY; AND PROVIDING AN
11 EFFECTIVE DATE.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. This act shall be known as the "Public School and Higher Edu-
14 cation Plant Facilities Act of 2003."
15 SECTION 2. LEGISLATIVE INTENT. The Legislature hereby declares that:
16 (1) While it is desirable to maintain local control and local responsibil-
17 ity for the construction and operation of Idaho's public schools, it is evi-
18 dent that reliance on the local property tax as the sole source of revenue for
19 plant facility construction and maintenance is no longer adequate or equita-
20 ble; and
21 (2) Idaho can meet its responsibility to provide each public school stu-
22 dent with a thorough education only if a portion of the funding for plant
23 facility construction and maintenance is provided from broad-based taxes col-
24 lected at the state level.
25 SECTION 3. That Sections 63-3622F and 63-3622G, Idaho Code, be, and the
26 same are hereby repealed.
27 SECTION 4. That Section 63-3622D, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 63-3622D. PRODUCTION EXEMPTION. There are exempted from the taxes imposed
30 by this chapter:
31 (a) The sale at retail, storage, use or other consumption in this state
32 of:
33 (1) Tangible personal property which will enter into and become an ingre-
34 dient or component part of tangible personal property manufactured, proc-
35 essed, mined, produced or fabricated for sale.
36 (2) Tangible personal property primarily and directly used or consumed in
37 or during a manufacturing, processing, mining, farming, or fabricating
38 operation, including, but not limited to, repair parts, lubricants,
39 hydraulic oil, and coolants, which become a component part of such tangi-
40 ble personal property; provided that the use or consumption of such tangi-
2
1 ble personal property is necessary or essential to the performance of such
2 operation.
3 (3) Chemicals, catalysts, and other materials which are used for the pur-
4 pose of producing or inducing a chemical or physical change in the product
5 or for removing impurities from the product or otherwise placing the prod-
6 uct in a more marketable condition as part of an operation described in
7 subsection (a)(2) of this section, and chemicals and equipment used in
8 clean-in-place systems in the food processing and food manufacturing
9 industries.
10 (4) Safety equipment and supplies required to meet a safety standard of a
11 state or federal agency when such safety equipment and supplies are used
12 as part of an operation described in subsection (a)(2) of this section.
13 (5) Plants to be used as part of a farming operation.
14 (b) Other than as provided in subsection (c) of this section, the exemp-
15 tions allowed in subsections (a)(1), (2), (3) and (4) of this section are
16 available only to a business or separately operated segment of a business
17 which is primarily devoted to producing tangible personal property which that
18 business will sell and which is intended for ultimate sale at retail within or
19 without this state. A contractor providing services to a business entitled to
20 an exemption under this section is not exempt as to any property owned,
21 leased, rented or used by it unless, as a result of the terms of the contract,
22 the use of the property is exempt under section 63-3615(b), Idaho Code.
23 (c) The exemptions allowed in subsections (a)(1), (a)(2), (a)(3) and
24 (a)(4) of this section shall also be available to a business, or separately
25 operated segment of a business, engaged in farming or mining, whether as a
26 subcontractor, contractor, contractee or subcontractee, when such business or
27 segment of a business is primarily devoted to producing tangible personal
28 property which is intended for ultimate sale at retail within or without this
29 state, without regard to the ownership of the product being produced.
30 (d) As used in this section, the term "directly used or consumed in or
31 during" a farming operation means the performance of a function reasonably
32 necessary to the operation of the total farming business, including, the
33 planting, growing, harvesting and initial storage of crops and other agricul-
34 tural products and movement of crops and produce from the place of harvest to
35 the place of initial storage. It includes disinfectants used in the dairy
36 industry to clean cow udders or to clean pipes, vats or other milking equip-
37 ment.
38 (e) The exemptions allowed in this section do not include machinery,
39 equipment, materials and supplies used in a manner that is incidental to the
40 manufacturing, processing, mining, farming or fabricating operations such as
41 maintenance and janitorial equipment and supplies.
42 (f) Without regard to the use of such property, this section does not
43 exempt:
44 (1) Hand tools with a unit purchase price not in excess of one hundred
45 dollars ($100). A hand tool is an instrument used or worked by hand.
46 (2) Tangible personal property used in any activities other than the
47 actual manufacturing, processing, mining, farming or fabricating opera-
48 tions such as office equipment and supplies, and equipment and supplies
49 used in selling or distributing activities.
50 (3) Property used in research or development.
51 (4) Property used in transportation activities.
52 (5) Machinery, equipment, tools or other property used to make repairs.
53 This subsection does not include repair parts that become a component part
54 of tangible property exempt from tax under this section or lubricants,
55 hydraulic oil, or coolants used in the operation of tangible personal
3
1 property exempt under this section.
2 (6) Machinery, equipment, tools or other property used to manufacture,
3 fabricate, assemble or install tangible personal property which is:
4 (i) Not held for resale in the regular course of business; and
5 (ii) Owned by the manufacturer, processor, miner, farmer or fabrica-
6 tor;
7 provided, however, this subsection does not prevent exemption of machin-
8 ery, equipment, tools or other property exempted from tax under subsection
9 (a)(2) or (a)(3) of this section.
10 (7) Any improvement to real property or fixture thereto or any tangible
11 personal property which becomes or is intended to become a component of
12 any real property or any improvement or fixture thereto.
13 (8) Motor vehicles and aircraft.
14 (9) Tangible personal property used or consumed in processing, producing
15 or fabricating tangible personal property exempted from tax under this
16 chapter in sections 63-3622F, 63-3622G and 63-3622I, Idaho Code.
17 (10) Tangible personal property described in section 63-3622HH, Idaho
18 Code.
19 (g) Any tangible personal property exempt under this section which ceases
20 to qualify for this exemption, and does not qualify for any other exemption or
21 exclusion of the taxes imposed by this chapter, shall be subject to use tax
22 based upon its value at the time it ceases to qualify for exemption. Any tan-
23 gible personal property taxed under this chapter which later qualifies for
24 this exemption shall not entitle the owner of it to any claim for refund.
25 SECTION 5. That Section 63-3622JJ, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 63-3622JJ. LOGGING EXEMPTION. There are exempted from the taxes imposed
28 by this chapter:
29 (1) The sale at retail, storage, use or other consumption in this state
30 of tangible personal property which is primarily and directly used or consumed
31 in logging including, but not limited to, log loaders, log jammers, log
32 skidders and fuel used in logging trucks, provided that the use or consumption
33 of such tangible personal property is necessary or essential to logging.
34 (2) The exemption allowed by subsection (1) of this section does not
35 include machinery, equipment, materials and supplies used in a manner that is
36 incidental to logging such as maintenance and janitorial equipment and sup-
37 plies, and hand tools with a unit purchase price not in excess of one hundred
38 dollars ($100); nor does it include tangible personal property used in any
39 activities other than the actual logging, such as office equipment and sup-
40 plies, equipment and supplies used in selling or distributing activities, in
41 research, or, except for fuel used in logging trucks, in transportation activ-
42 ities; nor shall this exemption include motor vehicles or aircraft, without
43 regard to the use to which such motor vehicles or aircraft are put; nor shall
44 this exemption apply to vehicles or equipment described in section 63-3622HH,
45 Idaho Code; nor shall this exemption include tangible personal property used
46 to produce tangible personal property exempted from the tax under this chapter
47 by section 63-3622G, Idaho Code.
48 SECTION 6. That Section 63-3638, Idaho Code, be, and the same is hereby
49 amended to read as follows:
50 63-3638. SALES TAX -- DISTRIBUTION. All moneys collected under this chap-
51 ter, except as may otherwise be required in section 63-3203, Idaho Code, shall
4
1 be distributed by the tax commission as follows:
2 (1) An amount of money shall be distributed to the state refund account
3 sufficient to pay current refund claims. All refunds authorized under this
4 chapter by the commission shall be paid through the state refund account, and
5 those moneys are continuously appropriated.
6 (2) Five million dollars ($5,000,000) per year is continuously appropri-
7 ated and shall be distributed to the permanent building fund, provided by sec-
8 tion 57-1108, Idaho Code.
9 (3) Four million eight hundred thousand dollars ($4,800,000) per year is
10 continuously appropriated and shall be distributed to the water pollution con-
11 trol account established by section 39-3605, Idaho Code.
12 (4) An amount equal to the sum required to be certified by the chairman
13 of the Idaho housing and finance association to the state tax commission pur-
14 suant to section 67-6211, Idaho Code, in each year is continuously appropri-
15 ated and shall be paid to any capital reserve fund, established by the Idaho
16 housing and finance association pursuant to section 67-6211, Idaho Code. Such
17 amounts, if any, as may be appropriated hereunder to the capital reserve fund
18 of the Idaho housing and finance association shall be repaid for distribution
19 under the provisions of this section, subject to the provisions of section
20 67-6215, Idaho Code, by the Idaho housing and finance association, as soon as
21 possible, from any moneys available therefor and in excess of the amounts
22 which the association determines will keep it self-supporting.
23 (5) An amount equal to the sum required by the provisions of section
24 63-709, Idaho Code, is continuously appropriated and shall be paid as provided
25 by section 63-709, Idaho Code.
26 (6) An amount required by the provisions of chapter 53, title 33, Idaho
27 Code.
28 (7) An amount required by the provisions of chapter 87, title 67, Idaho
29 Code.
30 (8) One dollar ($1.00) on each application for certificate of title or
31 initial application for registration of a motor vehicle, snowmobile, all-
32 terrain vehicle or other vehicle processed by the county assessor or the Idaho
33 transportation department excepting those applications in which any sales or
34 use taxes due have been previously collected by a retailer, shall be a fee for
35 the services of the assessor of the county or the Idaho transportation depart-
36 ment in collecting such taxes, and shall be paid into the current expense fund
37 of the county or state highway account established in section 40-702, Idaho
38 Code.
39 (9) Thirteen and three-quarters percent (13.75%) is continuously appro-
40 priated and shall be distributed to the revenue sharing account which is cre-
41 ated in the state treasury, and the moneys in the revenue sharing account will
42 be paid in installments each calendar quarter by the tax commission as fol-
43 lows:
44 (a) Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
45 ious cities as follows:
46 (i) Fifty percent (50%) of such amount shall be paid to the various
47 cities, and each city shall be entitled to an amount in the propor-
48 tion that the population of that city bears to the population of all
49 cities within the state; and
50 (ii) Fifty percent (50%) of such amount shall be paid to the various
51 cities, and each city shall be entitled to an amount in the propor-
52 tion that the preceding year's market value for assessment purposes
53 for that city bears to the preceding year's market value for assess-
54 ment purposes for all cities within the state.;
55 (b) Twenty-eight and two-tenths percent (28.2%) shall be paid to the var-
5
1 ious counties as follows:
2 (i) One million three hundred twenty thousand dollars ($1,320,000)
3 annually shall be distributed one forty-fourth (1/44) to each of the
4 various counties; and
5 (ii) The balance of such amount shall be paid to the various coun-
6 ties, and each county shall be entitled to an amount in the propor-
7 tion that the population of that county bears to the population of
8 the state;
9 (c) Thirty-five and nine-tenths percent (35.9%) of the amount appropri-
10 ated in this subsection (9) shall be paid to the several counties for dis-
11 tribution to the cities and counties as follows:
12 (i) Each city and county which received a payment under the provi-
13 sions of section 63-3638(e), Idaho Code, during the fourth quarter of
14 calendar year 1999, shall be entitled to a like amount during suc-
15 ceeding calendar quarters.
16 (ii) If the dollar amount of money available under this subsection
17 (9)(c) in any quarter does not equal the amount paid in the fourth
18 quarter of calendar year 1999, each city's and county's payment shall
19 be reduced proportionately.
20 (iii) If the dollar amount of money available under this subsection
21 (9)(c) in any quarter exceeds the amount paid in the fourth quarter
22 of calendar year 1999, each city and county shall be entitled to a
23 proportionately increased payment, but such increase shall not exceed
24 one hundred five percent (105%) of the total payment made in the
25 fourth quarter of calendar year 1999.
26 (iv) If the dollar amount of money available under this subsection
27 (9)(c) in any quarter exceeds one hundred five percent (105%) of the
28 total payment made in the fourth quarter of calendar year 1999, any
29 amount over and above such one hundred five percent (105%) shall be
30 paid fifty percent (50%) to the various cities in the proportion that
31 the population of the city bears to the population of all cities
32 within the state, and fifty percent (50%) to the various counties in
33 the proportion that the population of a county bears to the popula-
34 tion of the state; and
35 (d) Seven and seven-tenths percent (7.7%) of the amount appropriated in
36 this subsection (9) shall be paid to the several counties for distribution
37 to special purpose taxing districts as follows:
38 (i) Each such district which received a payment under the provi-
39 sions of section 63-3638(e), Idaho Code, during the fourth quarter of
40 calendar year 1999, shall be entitled to a like amount during suc-
41 ceeding calendar quarters.
42 (ii) If the dollar amount of money available under this subsection
43 (89)(d) in any quarter does not equal the amount paid in the fourth
44 quarter of calendar year 1999, each special purpose taxing district's
45 payment shall be reduced proportionately.
46 (iii) If the dollar amount of money available under this subsection
47 (9)(d) in any quarter exceeds the amount distributed under paragraph
48 (i) of this subsection (9)(d), each special purpose taxing district
49 shall be entitled to a share of the excess based on the proportion
50 each such district's current property tax budget bears to the sum of
51 the current property tax budgets of all such districts in the state.
52 The state tax commission shall calculate district current property
53 tax budgets to include any unrecovered foregone amounts as determined
54 under section 63-802(1)(e), Idaho Code. When a special purpose taxing
55 district is situated in more than one (1) county, the tax commission
6
1 shall determine the portion attributable to the special purpose tax-
2 ing district from each county in which it is situated.
3 (iv) If special purpose taxing districts are consolidated, the
4 resulting district is entitled to a base amount equal to the sum of
5 the base amounts which were received in the last calendar quarter by
6 each district prior to the consolidation.
7 (v) If a special purpose taxing district is dissolved or
8 disincorporated, the state tax commission shall continuously distrib-
9 ute to the board of county commissioners an amount equal to the last
10 quarter's distribution prior to dissolution or disincorporation. The
11 board of county commissioners shall determine any redistribution of
12 moneys so received.
13 (vi) Taxing districts formed after January 1, 2001, are not entitled
14 to a payment under the provisions of this subsection (9)(d).
15 (vii) For purposes of this subsection (9)(d), a special purpose tax-
16 ing district is any taxing district which is not a city, a county or
17 a school district.
18 (10) From July 1, 2003, until June 30, 2013, an amount equal to the amount
19 of sales or use tax collected, as certified by the state tax commission, from
20 the sale or purchase of natural gas, electricity and water when delivered to
21 consumers at the place of consumption by means of pipes, wires, mains or simi-
22 lar system and an amount equal to the amount of sales or use tax collected, as
23 certified by the state tax commission, on the sale or purchase of any matter
24 used to produce heat by burning for the purpose of providing heat to any
25 building for domestic home use, including wood, coal, petroleum and gas, which
26 moneys shall be used for school plant facilities and university and college
27 plant facilities under such methods and allocations as may be provided by law.
28 Of the moneys provided in this subsection, fifty-five million dollars
29 ($55,000,000) annually shall be remitted to the school district building
30 account created in section 33-905, Idaho Code, and the remainder shall be
31 remitted to the permanent building fund to be expended on college and univer-
32 sity buildings and plant facilities.
33 (11) Any moneys remaining over and above those necessary to meet and
34 reserve for payments under other subsections of this section shall be distrib-
35 uted to the general fund.
36 SECTION 7. SEVERABILITY. The provisions of this act are hereby declared
37 to be severable and if any provision of this act or the application of such
38 provision to any person or circumstance is declared invalid for any reason,
39 such declaration shall not affect the validity of the remaining portions of
40 this act.
41 SECTION 8. This act shall be in full force and effect on and after July
42 1, 2003.
STATEMENT OF PURPOSE
RS 12659
This proposed legislation known as the "Public School and Higher Education
Plant Facilities Act of 2003" proposes to repeal Sections 63 3622F and 63-
3622G, Idaho Code, and amends Section 63 3622D, Idaho Code, and deletes
reference to two sales tax exemptions; amending section 63 3622JJ, Idaho Code.
Further, the legislation amends Section 63 3638, Idaho Code, to provide for
remittance of moneys to the school district building account and the permanent
building fund for a ten year period.
FISCAL IMPACT
From July 1, 2003, until June 30, 2013, an amount equal to the amount of sales
or use tax collected, as certified by the state tax commission, from the sale
or purchase of natural gas, electricity and water when delivered to consumers
at the place of consumption by means of pipes, wires, mains or similar system
and an amount equal to the amount of sales or use tax collected, as certified
by the state tax commission, on the sale or purchase of any matter used to
produce heat by running for the purpose of providing heat to any building for
domestic home use, including wood, coal, petroleum and gas, which moneys shall
be used for school plant facilities and university and college plant facilities
under such methods and allocation as may be provided by law. Of the moneys
provided, fifty five million dollars ($55,000,000) annually shall be remitted
to the school district building account created in section 33 905, Idaho Code
and the remainder shall be remitted to the permanent building fund to be
expended on college and university buildings and plant facilities.
Contact:
Name: Rep Tom Trail
Phone: 332 1202
STATEMENT OF PURPOSE/FISCAL NOTE H 121