2018 legislative session supports rural jobs, mining and natural resource infrastructure development

By Denise A. Dragoo

In his 2017 State of the State address, Gov. Gary R. Herbert challenged Utah businesses to create 25,000 jobs in 25 rural counties throughout Utah over his next four-year term. During the 2017 legislative session, the governor’s Rural Jobs Initiative was implemented with the Utah Rural Jobs Act, SB267, which provides a state tax credit for investments in eligible small businesses located in a rural county to expand and create high-wage jobs. The 2018 Utah Legislature has furthered the Rural Jobs Initiative by enacting job training, education and employment incentive programs and supporting natural resource infrastructure development.

Employment and Training Incentives

The Rural Jobs Initiative, introduced in 2017, provided the springboard for several incentive programs. Beginning in November 2017, the state accepted applications from entities qualified as an eligible Rural Investment Company (RIC) to raise investment funds for small business and provide eligible small business up to $5 million for development and expansion. Investors in RICs may receive a tax credit over a seven-year period. 

The 2018 Utah Legislature furthered the goals of the Utah Rural Jobs Act with the enactment of a new program to take online the jobs initiative. HB327, sponsored by Rep. Mike Noel, R-Kanab, authorizes a pilot project by Utah State University to provide online job training for high school and college-level students in rural areas. HB390, a companion measure introduced by Rep. Carl Albrecht, R-Richfield, creates the Rural Employment Expansion Program within the Governor’s Office of Economic Development (GOED). The bill provides post-employment grants to companies in rural areas that create high-paying jobs (i.e., wages in excess of 125 percent of average wage in the county). These are the types of high-paying jobs created by the mining, oil and gas industry and will encourage job growth in small rural counties. Both bills have been signed by the governor. 

Matching Talent and Training to Jobs

Although not tagged for rural development, three additional bills, all sponsored by Sen. Ann Millner, R-Ogden, will help train Utah’s workforce to match industry demand. SB103, Strategic Workforce Investments, improves the industry/educational partnership and funds a GOED report on the need for high-demand technical jobs in strategic industry areas. The report will be used to develop technical program instruction. SB104S1, Talent Development and Retention Strategy, provides for individuals pursuing qualifying associate or bachelor’s degrees with an intent to work in Utah. SB131, Talent Ready Utah Amendments, creates the Talent Ready Utah Center within GOED to provide training to match the demand for workforce. 

Mining and Resource Industry Growth and Rural Infrastructure Development

In addition to the job training and employment programs, the 2018 Legislature provided mining and infrastructure development incentives and tax credits to benefit rural areas. Noel sponsored the Natural Gas Infrastructure Amendments, HB422, to encourage the expansion of natural gas infrastructure into previously unserved rural areas. The bill authorizes a gas corporation to file an application with the Public Service Commission (PSC) for preapproval of rural natural gas infrastructure development costs. With PSC approval, these costs can be spread to the larger customer base. This bill has been signed into law. 

Sen. Jerry Stephenson’s, R-Layton, Utah Inland Port Authority bill, SB234S, sites an “inland port” in the Northwest Quadrant of Salt Lake City as a special trade zone. As currently envisioned, the inland port would facilitate global trade by pre-clearing resources and goods for international sale. Although located in Salt Lake City, the trade zone would help facilitate the sale of resources and goods developed and produced in rural areas of the state. Anticipated to spur job growth and economic development, this bill was signed by the governor but may be revisited by the Legislature to address issues raised by Salt Lake City.

Tax Reform

Tax reform was a major focus of the 2018 legislative session, and several tax measures were enacted (or defeated) that are beneficial to natural resource and heavy manufacturing industries located in rural Utah. HB293S5, Tax Rebalancing Provisions, sponsored by Rep. Bradley Last, R-Iron, Washington, slightly reduced the overall individual and corporate income tax from 5 percent to 4.95 percent. Specific to the mining, oil and gas industry, the bill allows flexibility in apportionment methodology, which should translate into a tax reduction for those industries. SB233, Sales and Use Tax Amendments, sponsored by Sen. Howard Stephenson, R- Draper, provides a contingent funding mechanism to eliminate the three-year useful life requirement for the sales tax exemption on mining and manufacturing equipment sold in the state. The funding for this exemption is conditioned upon collection of revenue from remote sales, which is dependent upon a favorable ruling by the U.S. Supreme Court anticipated this year. 

The Utah Legislature defeated HB403, Tax Modifications, sponsored by Rep. Joel Briscoe, D-Salt Lake City, which sought to enact a carbon tax on large emitters of carbon dioxide. This tax would have burdened several industries located in rural areas, including natural gas systems, cement and lime producers and power plants. Similar measures were also defeated this session by the Oregon and Washington state legislatures. The Utah Legislature also appropriated funds for a commerce clause challenge to California’s surcharge on coal and natural gas-fired electricity imported from Utah.

In sum, the 2018 Utah Legislature has further implemented Gov. Herbert’s Rural Jobs Initiative to create 25,000 jobs within the state’s 25 rural counties. The Legislature has passed and funded measures to incentivize natural resource infrastructure development in rural areas, to provide tax credits beneficial to resource industry located in rural areas, and to support workforce education and training needed to help keep these jobs in Utah.

Denise A. Dragoo is a partner with the Salt Lake City law firm Snell & Wilmer. Her practice focuses on natural resources and environmental law, including coal, water, mining, public land and issues affecting energy-related minerals and the oil and gas industry.