NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to HB 448, HB 616, HB 807, HB 904, SB 119, SB 407, SB 559, SB 808

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department

State Highway and Transportation Department

Environment Department

SUMMARY

Synopsis of Bill

The bill changes the imposition of the petroleum products loading fee on gasoline. Volumes would be calculated to the nearest one-hundredth of a load.

The gasoline tax deduction for a "registered Indian tribal distributor" would be revised. The deduction allowed for fuel sold outside tribal boundaries would be eliminated. A deduction from the petroleum products loading fee for gasoline and special fuel sold on tribal lands is authorized if a tribal tax or fee has been imposed for corrective action at sites contaminated by leaking storage tanks.

The bill contains an emergency clause.

Significant Issues

A load is 80 gallons.

FISCAL IMPLICATIONS

The bill is projected to increase revenues to the corrective action fund and the local governments road fund by approximately $450.0 and $300.0, respectively, beginning FY02. The net volume products loading fee rate is subject to adjustment each October 1, based on balances in the corrective action fund. The fiscal impact reflects a tax levy of 1.25 cents per gallon. The fiscal impact is generated by the elimination of the deduction for fuel sold outside tribal boundaries.

There is notable uncertainty on whether tribal volumes are subject to the petroleum products loading fee under current law. Therefore, this analysis does not assume a decrease in revenues from the approximately 40 million gallons sold at retail within tribal boundaries, because of the likelihood the tribes will impose a similar tax.

There is also the remote possibility that tribes would not impose the corresponding tax. In this case the fiscal impact would increase by $400.0 to 600.0.

TECHNICAL ISSUES

Because the state's levy can potentially change, annual dissemination of rate changes to tribal governments would be useful. An effective date of April 1, 2001 should be considered.

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