Utah could begin amassing millions of dollars in tax revenue from oil and gas mining if a bill sponsored by Rep. John Dougall, R-American Fork, finds success.
Dougall's bill, HB58, would create a special trust fund for some of the revenue generated from the severance tax, one of three taxes the state currently imposes on the oil and gas mining industry.
HB58 is currently set up to direct $57.6 million a year from the general fund into the trust fund. And in turn, the interest from that fund, which may generate returns of 8 percent to 12 percent a year, would be used to fund various projects across the state and in mining areas.
"These are state resources," Dougall said during a meeting of the Utah Tax Review Commission Friday. "These are also resources from the community they came from."
It only makes sense that some of the economic benefit from the trust fund would be directed to those communities, Dougall says.
Members of the commission questioned whether a general fund decrease of $57.6 million a year would be palatable to the rest of the Legislature, which meets for seven more weeks during its general session.
Dougall offered to start the fund with a smaller amount something around $5 million a year.
Though the interest on $5 million would be a negligible amount, it would be a starting place, Dougall said. In future years, the amount could be increased by future legislation, he said.
The critical thing, he said, is to get the bill passed by the House and Senate so the fund can get created.
He pointed to Wyoming and New Mexico, which have similar trust funds.
Wyoming has something like $1 billion in its fund and New Mexico has $3 billion or so, Dougall said.
"We're 50 years late doing this," he said.The commission gave its support to Dougall's bill with a motion that urged the Legislature to fund the trust fund at the highest possible amount.