05/11/1997 12:48 PM Senate RLS

  CHAIRMAN LEMAN  called the Senate Rules Committee May 11 meeting to          
 order at 12:49 p.m., and noted the presence of Senators Miller,               
 Duncan and Leman.                                                             
                                                                               
  CHAIRMAN LEMAN  introduced  CSHB 63(RLS)  (MOTOR FUEL TAX EXEMPTION)         
 as the first order of business.  He noted there was a proposed                
 Rules SCS for the committee's consideration, which, in the non-               
 attainment areas, puts a seasonal exemption of 4 cents on during              
 the months that is required by the state and the EPA to meet                  
 quality standards.  As incentives, there is also a full 8 cent                
 exemption if the alcohol for the addition to the fuel is produced             
 from lignocellulose or from seafood waste.                                    
                                                                               
  BOB BARTHOLOMEW , Deputy Director, Income & Excise Audit Division,           
 Department of Revenue,  explained the Rules SCS makes one change to           
 the previous bill.  The previous bill repealed the exemption for              
 gasohol that is currently in the statute.   It will change that               
 from completely being exempt from the tax to being subject to a 4             
 cent a gallon tax, which is one half of the current motor fuel tax            
 rate that is paid throughout the state.                                       
                                                                               
 Mr. Bartholomew related that a rough financial analysis by the                
 division shows that the industry has testified that over the last             
 years the cost of the additive to a gallon of gas has ranged from             
 13 cents to 20 cents a gallon.  He said if you look at the federal            
 tax credit, which is 5 cents a gallon, and the state tax credit               
 under this proposal, which would be 4 cents a gallon, the actual              
 cost increase for an additive ranges from 4 cents to 11 cents a               
 gallon.  However, he said information shows that the price of gas             
 shouldn't have to vary whether ethanol is being sold or not.                  
                                                                               
 Addressing the fiscal impact from the change, Mr. Bartholomew said            
 an additional $8 million in revenue would be collected, and this              
 change would reduce the $8 million by $1.4 million, so the new                
 revenue coming in from motor fuel would be $6.6 million.                      
                                                                               
 The current fiscal note shows a net of all of the provisions of the           
 bill being $4.5 million in new revenue, after the aviation jet fuel           
 change and the marine fuel change.  The new fiscal note for the               
 Rules SCS will show almost $2.2 million as the net increase in                
 revenue.                                                                      
                                                                               
  SENATOR LEMAN  asked what the difference would be if the exemption           
 in the non-attainment areas would be 8 cents seasonally.   MR.                
 BARTHOLOMEW  replied that it would go down approximately another              
 $1.5 million.                                                                 
                                                                               
  SENATOR MILLER  moved the adoption of SCS CSHB 63(RLS).  Hearing no          
 objection, it was so ordered.                                                 
                                                                               
  SENATOR MILLER  moved SCS CSHB 63(RLS) be approved for calendaring           
 at the discretion of the Chair.  Hearing no objection, it was so              
 ordered.