lose under HB309

l Salt Lake City:

$1 million

l Midvale: $200,000

l Sandy: $350,000

l South Jordan: $800,000 (two years) In December, look closely at your natural gas bill and you should see a reduction.

That's because, thanks to a bill adopted by the Legislature, cities won't be able to keep the windfalls in taxes they have amassed these past months from skyrocketing natural gas prices.

Rep. Greg Hughes estimates the rebate from this winter's gas rates will amount to $10 million to $15 million. An average household amount is difficult to calculate because the return will depend on the amount of gas used.

"You'll see a rebate in your gas bill in December of '06 that will reflect money returned to you from your municipality," the Draper Republican said Wednesday. "Anything helps when looking at what we've paid in natural gas bills."

Hughes sponsored HB309, which awaits the governor's signature, after Questar raised rates by almost 40 percent last year. Bills grew even bigger for some because almost half of Utah's cities charge a municipal energy sales tax that, until now, allowed cities to collect more as Questar raised rates.

Questar backed the bill, noting the tax isn't a stable source of revenue. "They're hidden within our bills," said spokesman Chad Jones.

The bill caps the amount of money cities can collect at 10 percent above what they collected in fiscal year 2005. Anything higher would be paid back to ratepayers in December via a one-time reduced tax. Such rebates would end after 2007. In the meantime, lawmakers will be working on a broader overhaul of the tax.

The decrease in gas taxes helps you but it's hurting some cities' bottom lines.

While Hughes disputes that cities will be harmed because they couldn't have anticipated a 40 percent increase in rates, cities are feeling the pinch.

South Jordan City Manager Ricky Horst said his city is growing by 20 percent with housing and commercial developments, but can keep only 10 percent of the tax. He anticipates South Jordan losing $800,000 over the two years and doesn't know if the city will have to cut services.

"It's going to have a major impact on us that we will never be able to recoup," Horst said. "The assumption is the cities are getting a windfall to begin with. [Lawmakers] fail to realize our bills are going up."

Salt Lake City expects to lose $1 million. Finance Director Gordon Hoskins said the 10 percent cap won't cover the capital's costs. He pointed to how city departments need another $331,000 to pay their natural gas bills.

Midvale Administrator Kane Loader said his suburb will miss out on an extra $200,000 that could be used to cover other expenses. "Although this looks like a windfall, and it is, it helps us cover those costs we didn't anticipate [such as increased vehicle fuel costs]."

Murray Mayor Dan Snarr doesn't believe his city will need to issue a rebate. The only thing that could change that is when the city sees a spike in natural gas usage as the Intermountain Medical Center opens its five-building complex in 2007.

"We're OK," Snarr said. "That 10 percent margin makes us all right."

Sandy's assistant director of community development, Nick Duerksen, said the $350,000 cut will hurt but, "on the other hand, in terms of residents, what's lost is probably a benefit."

hmay@sltrib.com

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Tribune reporter Jacob Santini contributed to this story.