HB-5705, As Passed House, June 7, 2012

SUBSTITUTE FOR

HOUSE BILL NO. 5705

     A bill to amend 1990 PA 100, entitled

"City utility users tax act,"

by amending section 2 of chapter 1 and sections 2 and 3 of chapter

2 (MCL 141.1152, 141.1162, and 141.1163), section 2 of chapter 1 as

amended by 2011 PA 57, and by adding sections 8a and 8b to chapter

1.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

CHAPTER 1

     Sec. 2. (1) The governing body of a city having a population

of 600,000 or more, by a lawfully adopted ordinance that

incorporates by reference the uniform city utility users tax

ordinance set forth in chapter 2, may levy, assess, and collect

from those users in that city a utility users tax as provided in

the ordinance. However, a uniform city utility users tax ordinance

containing substantially the same provisions provided for in

chapter 2 adopted by the governing body of a city before June 13,

1990 that has not been rescinded by that governing body is

considered an ordinance adopted under this act and a tax imposed

and collected under that ordinance is revived. The governing body

shall set the rate of tax in increments of 1/4 of 1% that shall not

exceed 5%. If a city currently eligible to levy a tax under this

act enters into a contract with a lighting authority, in which it

pledges revenues from the taxes levied under this act, the city is

authorized to levy the tax under this act until all related

outstanding bonds of the lighting authority have been paid

notwithstanding the population of that city.

     (2) A uniform city utility users tax ordinance may be lawfully

adopted or unless revenues have been otherwise pledged rescinded by

the governing body at any time and its adoption shall become

effective on the first day of any month, following adoption of the

ordinance, as specified in the ordinance. The ordinance may be

rescinded at any time by the governing body in the same manner in

which the ordinance was adopted and with appropriate enforcement,

collection, and refund provisions with respect to liabilities

incurred before the effective date of its rescission. The ordinance

shall not be amended except as provided by the legislature. A

village and a city under 600,000 population shall not impose and

collect a utility users tax except as otherwise provided in

subsection (1). A city that adopts or rescinds the tax shall notify

within 7 days by certified mail all public utilities or resale

customers affected by the action of the governing body. Except as

otherwise provided in this section, a city now having or that may

attain a population of 600,000 or more shall not impose a utility

users tax except by adopting the entire uniform city utility users

tax ordinance as set forth in chapter 2.

     (3) The administrator, as that term is defined in chapter 2,

of the tax shall file a report indicating the total amount of

revenue collected in the prior fiscal year with the state revenue

commissioner by August 1 of each year, beginning on August 1, 1985.

The administrator shall make the report available to the public at

the same time.

     (4) The Unless revenues have been otherwise pledged to pay

bonds issued by a lighting authority, the revenue generated from

this tax shall be placed directly in the budget of the police

department of a city described in this act and shall be used

exclusively to retain or hire police officers.

     (5) Notwithstanding subsection (4) or any ordinance of a city

to the contrary, a city that forms a lighting authority shall pay

$12,500,000.00 annually to that lighting authority from the

proceeds of the tax authorized under this act. If the lighting

authority issues bonds pursuant to a contract with the city under

this act and pledges revenues from taxes levied under this act,

those revenues shall be deposited and used as provided in this act.

After a contract described in this subsection is entered into, the

trustee, after setting aside funds as required by the trust

indenture, shall pay to the lighting authority $12,500,000.00, less

the amount set aside. The trust indenture shall provide that the

remaining revenues be returned to the city. Nothing in this

subsection shall obligate a city or trustee to remit to the

lighting authority more than is collected from taxes levied under

this act.

(6) (5) As used in this section, "police officer" means a

police officer, investigator, or police sergeant.

     (7) As used in this act, "lighting authority" means a lighting

authority created under the municipal lighting authority act.

     Sec. 8a. Notwithstanding any ordinance of a city levying a tax

authorized by this act, if a city levying the tax authorized by

this act enters into a contract with a lighting authority, all of

the following shall apply:

     (a) The city shall send notice to each public utility and

resale customer to remit taxes collected under this act to a

trustee until notified by that trustee to return the funds to the

city.

     (b) After receiving a notice described in subdivision (a),

each public utility and resale customer so notified shall remit

taxes as directed by the notice to the trustee until notified by

the trustee to remit taxes to the city.

     (c) The trustee shall notify each public utility and resale

customer to remit taxes collected under this act to the city within

45 days of the retirement of debt service on the bonds issued by a

lighting authority.

     Sec. 8b. Notwithstanding any ordinance of a city levying the

tax or any other provision of this act, any utility, resale

customer, other entity, or person that collects a tax or any money

represented to be a tax authorized under this act holds the amount

so collected in trust for the benefit of the city, or for

bondholders secured by a pledge with a lighting authority.

CHAPTER 2

     Sec. 2. For the purposes of this ordinance:

     (1) The words, terms and phrases set forth below and their

derivations have the meanings given therein. When not inconsistent

with the context, words used in the present tense include the

future, words in the plural number include the singular number, and

in the singular number include the plural. "Shall" is always

mandatory and not merely directory. "May" is always directory.

     (2) "Administrator" means the official designated by the city

to administer the provisions of this ordinance.

     (3) "Billed or ordinarily billable to locations within the

taxing city" means the location of the premises of the user for the

usage of the public utility services.

     (4) "Month" means a calendar month.

     (5) "Person" means a natural person, partnership, fiduciary,

association, corporation, or other entity. When used in any

provision imposing a criminal penalty, "person" as applied to an

association means the parties or members thereof, and as applied to

a corporation, the officers thereof.

     (6) "Public utility services" means the providing, performing

or rendering of public service of a telephone, an electric, steam,

or gas nature, the rates or other charges for which are subjected

to regulation by state public utility regulatory bodies, federal

public utility or regulatory bodies or both, or the rendering of

public service of an electric or gas nature by a government owned

facility.

     (7) "Public utility" means a person who provides public

utility services.

     (8) "Resale customer" means a person that purchases utility

services or property from a public utility for resale to a utility

user.

     (9) "Utility user" or "user" means a person required to pay a

tax imposed under the provisions of this ordinance.

     Sec. 3. Subject to the exclusions, adjustments, and exemptions

herein provided, a city utility users tax at the rate of ......%

for general revenue purposes is hereby imposed on and shall be paid

by the utility user. This tax shall be measured by the amounts

paid, not including any existing or hereafter enacted taxes

(including, but not limited to federal, state, city, and other

local taxes, directly added to or directly passed on in the users'

billing) paid by users for the public utility services as

hereinafter provided, billed or ordinarily billable to locations

within the taxing city:

     (a) The tax shall be imposed on all intrastate telephone

communication services, furnished by a public utility. The term

"intrastate telephone communication services" shall not include any

telephone service originating or terminating outside Michigan,

telephone services by coin-operated installations, directory

advertising proceeds, telephone services not taxable under section

4251 of Title 26 of the United States Code as of December 31, 1969,

as amended, centrex and multi-line key switching systems, mobile

telephone service, and any types of services or equipment,

furnished by telephone companies subject to public utility

House Bill No. 5705 (H-1) as amended June 7, 2012

regulation, during any period in which such services or equipment

are in competition with services or equipment furnished by or

available from persons other than telephone companies subject to

public utility regulation.

(a) (b) The tax shall be on all electrical energy and steam

provided by a public utility or a resale customer. The term

"electrical energy and steam provided" shall include amounts paid

for metered energy and steam, and minimum charges for service,

including user charges, service charges, demand charges, standby

charges, and annual and monthly charges. The term shall not include

electrical energy or steam sold to or exchanged with for resale by,

another public utility, or used or consumed in the conduct of the

business of an electric or steam public utility or a combination

gas and electric utility.

(b) (c) The tax shall be on all gas, natural or artificial

provided by a public utility or a resale customer. The term "gas,

natural or artificial provided" shall not include any gas sold for

use in the generation of electrical energy by a public utility, any

gas sold to or exchanged with for resale by, another gas public

utility, or any gas used or consumed in the conduct of the business

of a gas public utility or a combination gas and electric utility.

     [Enacting section 1. This amendatory act does not take effect unless all of the following bills of the 96th Legislature are enacted into law:

     (a) Senate Bill No. 970.

     (b) House Bill No. 5688.]