House approves ban on direct sales-tax rebates to retail developers, expands prohibition to counties

The Utah House on the floor adopted a second-substitute to Senate Bill 124, a measure that prevents cities and counties from giving sales-tax revenue directly to retail developers as inducements to locate in their jurisdictions. Representative Adams, sponsor of the substitute, said the change expands the original municipal-only bill to include counties at the request of local mayors and intends to stop a pattern of communities ‘‘zoning for dollars.’’

Opponents and questioners asked whether the bill would bar legitimate development agreements. Representative Adams replied the bill does not prevent use of sales-tax revenue for public infrastructure projects (roads, sewer, water and curb and gutter) that benefit both a business and the broader community; it only bars direct rebates of sales-tax dollars to retail developers. Representative Christiansen and others pressed for clarity about listed exemptions (code citations referenced on lines cited in the bill), which Adams said he would follow up on.

A contentious line of debate centered on whether the bill’s definition of “agreement” should include oral agreements. Representative Hansen proposed deleting the words “oral or” so the bill would mention only written agreements; multiple members objected, arguing leaving out the word would permit oral inducements and defeat the bill’s purpose. Representative Daniels explicitly said removing “oral” would produce the opposite of the sponsor’s intent. Representative Adams accepted a motion to amend earlier language and proceeded; the second substitute was adopted and the bill passed the House 64-1.

The House record shows the bill was brought to Senator Kilpack by a coalition of mayors and aims to prevent competition among neighboring communities that give away sales-tax revenues to attract retail. Supporters said the bill encourages economic development that produces jobs rather than retail that follows rooftops.

What’s next: The bill will be forwarded to the Senate for further consideration. The House debate did not provide statutory text for every exemption referenced; Representative Adams said he would identify the specific code sections afterward.

Quote: "This doesn't restrict a city from using sales tax revenue to attract business," Representative Adams said, "It simply restricts it for retail."