04/28/1998 01:35 PM Senate TRA

    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
 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.