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 The previous bill repealed the exemption for gasohol that is currently in the statute.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.