The tax break will average around $5 to $7 per household, and represents the windfall revenue that 121 Utah cities collected from their residents due to unusually high natural gas prices last winter.

"It may not be enough for a family to go out to dinner but every little bit helps, particularly during the holiday season," said Rep. Greg Hughes, R-Draper, who sponsored legislation passed by the Legislature earlier this year that will return an estimated $9 million to Utah homeowners.

Of Utah's 242 cities, half collect a 2 percent to 6 percent municipal "energy sales and use tax" that is tied to the amount that Questar bills each of its customers for the natural gas they've used.

After natural gas prices rose 40 percent in 2005, those cities discovered their coffers were full of extra tax money they weren't expecting to collect. Hughes then introduced his legislation designed to limit the windfall energy-sales taxes that municipalities were receiving due to those higher prices.

"At first, a lot of the cities were a little hesitant to embrace the idea of returning any windfall to residents," Hughes said. "But after we talked and compromised, most of them embraced the idea."

Paul Barber of the Utah Association of Energy Users said that the Hughes-sponsored legislation, House Bill 309, was passed with the support of the UAE, the state's Committee of Consumer Services, the Utah League of Cities and Towns and Questar.

"The amount varies from city to city, with the smaller cities reducing taxes by a few thousand dollars and the larger cities a few million," he said.

Barber pointed out that that natural gas users living in unincorporated areas of the state paid no municipal energy-sales tax and as a result should not expect to receive a credit on their December bill.

"There was never any intent by any city to collect a windfall," said Roger Tew, a tax consultant for the Utah League of Cities and Towns. "And this tax credit wouldn't have occurred without their support."

Some cities, though, say they have suffered financially as a result. And that's despite a compromise reached prior to the passage of HB 309 that allowed the cities this year to keep up to 10 percent above what they collected from their energy sales and use taxes in 2005.

South Jordan City Manager Ricky Horst said the tax holiday, nevertheless, will cost that city about $200,000 this year.

"Lawmakers assumed that all cities were getting a windfall but what they failed to realize was that much of the increased amount we were collecting was due to rising consumption from an influx of new businesses and new home developments," he said.

steve@sltrib.com