H.F. 224 Section 1. Section 310.3, Code 2015, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 2A. All funds received pursuant to section 3 452A.83. 4 Sec. 2. Section 331.429, subsection 1, paragraph e, Code 5 2015, is amended to read as follows: 6 e. Other moneys dedicated to this fund by law , including 7 but not limited to sections 306.15 , 309.52 , 311.23 , 311.29 , and 8 313.28 , and 452A.83 . 9 Sec. 3. Section 452A.3, subsection 6, Code 2015, is amended 10 to read as follows: 11 6. a. For the privilege of operating motor vehicles or 12 aircraft in this state, there is imposed an excise tax on the 13 use of special fuel in a motor vehicle or aircraft. 14 (1) The tax rate on special fuel for diesel engines of 15 motor vehicles other than fuel used in unlicensed vehicles, 16 stationary engines, implements used in agricultural production, 17 and machinery and equipment used for nonhighway purposes is 18 twenty-two and one-half cents per gallon. 19 (2) The tax rate on special fuel for diesel engines of 20 motor vehicles used in unlicensed vehicles, stationary engines, 21 implements used in agricultural production, and machinery and 22 equipment used for nonhighway purposes is the amount determined 23 by subtracting twenty-two and one-half cents per gallon from 24 the tax rate specified in subparagraph (1). 25 (3) The rate of tax on special fuel for aircraft is three 26 cents per gallon. 27 (4) On all other special fuel, unless otherwise specified in 28 this section , the per gallon rate is the same as the motor fuel 29 tax. 30 b. Indelible dye meeting United States environmental 31 protection agency and internal revenue service regulations must 32 be added to fuel before or upon withdrawal at a terminal or 33 refinery rack for that fuel to be exempt from tax and the dyed 34 fuel may be used only for an exempt purpose. 35 -1- LSB 1717YH (7) 86 ns/sc 1/ 3

H.F. 224 Sec. 4. Section 452A.17, subsection 1, paragraph a, 1 subparagraph (4), Code 2015, is amended to read as follows: 2 (4) Fuel , other than special fuel for diesel engines 3 of motor vehicles, used in unlicensed vehicles, stationary 4 engines, implements used in agricultural production, and 5 machinery and equipment used for nonhighway purposes. 6 Sec. 5. Section 452A.79, Code 2015, is amended to read as 7 follows: 8 452A.79 Use of revenue. 9 Except as provided in sections 452A.79A , 452A.82 , 452A.83, 10 and 452A.84 , the net proceeds of the excise tax on the diesel 11 special fuel and the excise tax on motor fuel and other special 12 fuel, and penalties collected under the provision of this 13 chapter , shall be credited to the road use tax fund. 14 Sec. 6. NEW SECTION . 452A.83 Diesel fuel used for 15 nonhighway purposes. 16 1. The portion of the moneys collected under section 17 452A.3, subsection 6, received on account of special fuel for 18 diesel engines of motor vehicles used in unlicensed vehicles, 19 stationary engines, implements used in agricultural production, 20 and machinery and equipment used for nonhighway purposes shall 21 be credited as follows: 22 a. Fifty percent shall be deposited in the secondary road 23 fund of the counties created in section 331.429. 24 b. Fifty percent shall be deposited in the farm-to-market 25 road fund created in section 310.3. 26 2. Notwithstanding any other provision of law to the 27 contrary, the moneys deposited in the secondary road fund of 28 the counties and the farm-to-market road fund pursuant to this 29 section shall not result in a decrease in the amount of other 30 moneys deposited in such funds by operation of law. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 Current law exempts fuel used in unlicensed vehicles, 35 -2- LSB 1717YH (7) 86 ns/sc 2/ 3

H.F. 224 stationary engines, implements used in agricultural production, 1 and machinery and equipment used for nonhighway purposes from 2 the excise tax on motor fuel. This bill removes special fuel 3 for diesel engines from the exemption, and provides that 4 special fuel for diesel engines used in unlicensed vehicles, 5 stationary engines, implements used in agricultural production, 6 and machinery and equipment used for nonhighway purposes shall 7 be taxed at a rate that is 22.5 cents less per gallon than 8 other special fuel for diesel engines. The current tax rate on 9 special fuel for diesel engines is 22.5 cents per gallon. 10 The bill provides that of the moneys collected from 11 the excise tax on special fuel for diesel engines used in 12 unlicensed vehicles, stationary engines, implements used in 13 agricultural production, and machinery and equipment used for 14 nonhighway purposes, 50 percent shall be deposited in the 15 secondary road fund, and 50 percent shall be deposited in 16 the farm-to-market road fund. The moneys deposited in the 17 secondary road fund and the farm-to-market road fund pursuant 18 to the bill shall not result in a decrease in the amount of 19 other moneys deposited in such funds by operation of law. 20 -3- LSB 1717YH (7) 86 ns/sc 3/ 3