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F I S C A L I M P A C T R E P O R T

SPONSOR Miera

ORIGINAL DATE

LAST UPDATED

1/25/06

HB 199

SHORT TITLE Eliminate Special Fuels Bulk Storage User Permits SB

ANALYST Francis

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

(20.)

(40.)

(40.) Recurring State Road Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Taxation and Revenue Department (TRD)

Responses Received From

Taxation and Revenue Department (TRD)

Energy Minerals and Natural Resources (EMNRD)

SUMMARY

Synopsis of Bill

House Bill 199 amends the special fuel supplier deduction from the special fuel excise tax. Spe-

cifically, the bill eliminates the special fuel bulk storage user permit and the deduction a supplier

gets from having this permit.

FISCAL IMPLICATIONS

The special fuels bulk user permit had a fee of $10 associated with it so there is an impact for the

state road fund and the local road fund. This impact, TRD estimates, is approximately $40 thou-

sand per tax year in lower permit fees to the state road fund.

OTHER SUBSTANTIVE ISSUES

TRD:

Under present law, the Taxation and Revenue Department is authorized to sell bulk storage

House Bill 199 – Page 2

permits for $10 per year that allow the holder to purchase un-dyed diesel for use in their own

agricultural and construction vehicles. Fuel purchased with the permits is not subject to the

special fuels tax. The federal government also authorizes tax-free sales of diesel fuel for off-

road purposes, but in this case, the fuel must be dyed a different color so that an inspector can

easily determine whether fuel intended for off-road use if being used on the roads.

The state’s bulk storage permit system is an inefficient way of implementing the fuel tax ex-

emption for off-road uses. The system was implemented at a time when dyed fuel was not

available to all potential users. This is no longer the case. By eliminating the bulk storage

permits, the state can still allow an exemption for off-road users who use dyed fuel, while im-

proving compliance with the special fuels tax by making it harder to use tax-exempt fuel for

un-intended purposes.

NF/yr