Legislature(1997 - 1998)
04/28/1998 01:35 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSHB 239(FIN) - MOTOR FUEL TAX CREDIT:TAX NOT PD BY USER REPRESENTATIVE GARY DAVIS, sponsor of HB 239, stated the bill is an attempt to resolve a problem brought to his attention several years ago. A fuel distributor was owed an excessive amount of taxes from a purchaser. The purchaser went bankrupt leaving the distributor unable to collect the motor fuel tax that the distributor paid on that delivery. Current statute requires the buyer to pay motor fuel tax when the distributor delivers the fuel. HB 239 allows the distributor to claim a credit for $500 or more in fuel taxes paid to the state that the distributor cannot recover through no fault of his/her own. The legislation establishes guidelines under which the Department of Revenue will establish regulations. The credit will only apply to aggregate amounts of taxes paid of $500 or more before it goes into effect. The Department of Revenue proposed an amendment to clarify existing language on page 2, lines 5 and 6. SENATOR WARD asked Representative Davis to explain the amendment. REPRESENTATIVE DAVIS explained the Department of Revenue believes the existing language on page 2, lines 5-6, is awkward. That language reads, "(1) under this chapter, the sales or transfers result in a tax liability, in the aggregate, on the transactions of $500 or more; and." The amendment deletes the words, "on the transactions" for the purpose of simplification. SENATOR GREEN moved to adopt the amendment. There being no objection, the motion carried. SENATOR HALFORD questioned why the Department of Revenue submitted a zero fiscal note that states it is not feasible to estimate the revenue loss, but includes estimates. He maintained that it is bad policy to submit zero fiscal notes that include amounts in the explanation, and he does not think the Legislature should let the Administration get away with doing so. Number 376 CHAIRMAN WARD asked Senator Halford if he would like the Senate Transportation Committee to do a separate fiscal note. SENATOR HALFORD suggested that the committee request the Department of Revenue to reflect its best estimate in the fiscal note. He added that the Department of Revenue should not deny the statutory requirement to estimate the cost of the bill just because it is not easy to do. CHAIRMAN WARD asked Representative Davis if he has discussed the fiscal note with the Department of Revenue. REPRESENTATIVE DAVIS said he has discussed the explanation section and he understands their unwillingness to put an actual dollar figure on the fiscal note. Number 388 BOB BARTHOLOMEW, Assistant Director of the Income and Excise Tax Division of the Department of Revenue, stated the department does not know what, if any, bad debt is in the industry related to motor fuel sales. The department called other states to find out their experiences and from those discussions, came up with an estimate of .01 percent. He did try to give some sense of the financial impact to the committee but did not include it in the fiscal note because of the uncertainty of it actually happening. SENATOR GREEN indicated the two page attachment to the fiscal note was not actually attached to it, which may have created some confusion. SENATOR WILKEN expressed concern about the basis of the legislation because the state will be subsidizing bad debt that could be taken care of through normal business practices, and this bill might set a precedent. He stated, to give an example, Petro, one of the state's biggest fuel customers, might do $45 million per year in business, so if Petro is losing $4500 per year, that does not seem important enough to begin the process of subsidizing businesses that go bankrupt. He noted indications of bankruptcy come far ahead of the actual event. Number 428 REPRESENTATIVE DAVIS said he appreciates the discussion, but does not believe that Petro Marine would not find that amount of debt to be a hardship, but would support this idea on principle. Current law requires the distributor to pay the tax when fuel is delivered, therefore the distributor is paying in advance, and betting that the customer will reimburse the expense. SENATOR HALFORD pointed out the fiscal note requirements in Title 24 require that a fiscal note shall contain an estimate of the amount of appropriation increase or decrease that will result from enactment of the bill. If the bill has no fiscal impact, a statement to that effect shall be attached. The fiscal note for HB 239 says that its enactment will cost money but contains zeroes, so it does not meet the law. He expressed concern that this Administration is submitting more and more of these fiscal notes. CHAIRMAN WARD asked Mr. BARTHOLOMEW if he is familiar with that requirement. MR. BARTHOLOMEW said he has not read that portion of Title 24 but is familiar with the requirement to do fiscal notes. He stated he does not believe the department would have a problem with putting the estimate contained on page three on the fiscal note. Number 456 SENATOR LINCOLN suggesting changing the fiscal note in committee to reflect the actual estimate. SENATOR HALFORD moved HB 239 from committee with the attached fiscal note, and a note to the Senate Finance Committee indicating that the fiscal note does not reconcile with the legislation. There being no objection to the motion, HB 239 moved to the Senate Finance Committee.
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