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House debate over severance tax incentives centers on job recovery in Uinta Basin; bill creates sliding tax, wildcat holiday and workover credit
Summary
Substitute House Bill 110 would create a sliding severance tax on oil, extend the wildcat well tax holiday and create a limited workover tax-credit account; sponsors said it aims to revive drilling and employment in the Uinta Basin while critics sought technical fixes and a sunset for the restricted fund.
Representative David M. Adams, sponsor of substitute House Bill 110, described the proposal as an economic-development package for oil-producing counties, saying: "Out in the oil patch of Utah, we are in serious trouble and that production is declining," and that the bill is designed to boost production and local employment.
The substitute proposal contains three principal elements: a sliding severance tax on oil (a lower rate when price-per-barrel is low and a higher rate on the portion above a specified threshold); a one-year production holiday for new wildcat wells (extending the current six-month holiday to 12 months); and a targeted workover incentive — a 20% tax credit on qualifying well-improvement costs up to $50,000 per well, supported by a $2.5 million restricted account. Adams said the package was intended to attract investment and avoid losing recoverable reserves.
Members asked for technical clarifications: several questioned the breakpoints in the sliding tax schedule (sponsor confirmed the break point at an illustrative $13 per barrel and explained tax treatment for the portion above that amount), the duration and sunset for the restricted account, and whether unused funds would revert to the general fund. Representative Stevens proposed and the House accepted a clarifying amendment specifying that the restricted account "shall be closed, and the fund balance shall revert to the general fund on 12/31/1994." Adams accepted the amendment as friendly.
Supporters stressed local economic effects: Representative Nielsen and others described high local unemployment and the collapse of the support economy in producing counties. Opponents and questioners pressed for precise drafting, time frames for the credit program and the mechanics of how the sliding rate applies to price brackets. A call for the previous question was attempted and failed in one instance, and the debate included multiple friendly amendments and votes on technical fixes.
The transcript records extensive floor debate and the acceptance of technical amendments (including a repeal/revert clause for the incentive account). The bill's final recorded passage on this excerpt is not shown; the measure remained the subject of vote motions and further floor action in the session later that day.
