HF 2147 (LSB 5389YH (5) 85)

HOUSE FILE 2147

BY  HEIN

A BILL FOR

An Act relating to funding for Iowa roads by providing for an annual transfer of revenue from the Iowa economic emergency fund to the road use tax fund and for adjustments to the rate of the excise taxes on motor fuel and certain special fuel used in motor vehicles.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 8.55, subsection 2, Code 2014, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  The remaining revenues not to exceed two hundred twenty million dollars for the fiscal year shall be transferred to the road use tax fund. The department of management shall certify to the department of revenue the amount transferred under this paragraph.
    Sec. 2.  Section 8.55, subsection 2, paragraph b, Code 2014, is amended to read as follows:
   b.  The remainder of the excess, if any, Any excess remaining after the transfers required in paragraphs “a” and “0b” shall be transferred to the general fund of the state.
    Sec. 3.  Section 452A.3, subsections 1 and 1A, Code 2014, are amended by striking the subsections and inserting in lieu thereof the following:
   1.  a.  Except as otherwise provided in this section and in this division, this subsection shall apply to the excise tax imposed on each gallon of motor fuel used for any purpose for the privilege of operating motor vehicles in this state.
   b.  Until December 31, 2014, an excise tax of twenty cents is imposed on each gallon of motor fuel used for any purpose for the privilege of operating motor vehicles in this state. For the calendar year beginning January 1, 2015, and each calendar year thereafter, if the amount transferred to the road use tax fund for the fiscal year ending during the immediately preceding calendar year pursuant to section 8.55, subsection 2, is less than two hundred twenty million dollars, the rate of the tax shall be the sum of twenty cents plus the amount of the increase determined by the department pursuant to subsection 1A.
   1A.  If the amount transferred to the road use tax fund for the fiscal year ending during the immediately preceding calendar year pursuant to section 8.55, subsection 2, is less than two hundred twenty million dollars, the amount of the increase to be applied to the tax rates under subsection 1 and subsection 3, paragraph “b”, subparagraph (1), shall be an amount equal to the difference between two hundred twenty million dollars and the amount transferred, divided by the number of gallons of motor fuel and special fuel for diesel engines of motor vehicles distributed in this state during the fiscal year ending during the immediately preceding calendar year, rounded to the nearest one-half cent. For purposes of this subsection, only ethanol blended gasoline and gasoline other than ethanol blended gasoline, not including aviation gasoline, shall be used in determining the number of gallons of motor fuel distributed.
    Sec. 4.  Section 452A.3, subsection 1C, Code 2014, is amended to read as follows:
   1C.  The rate of the excise tax on E-85 gasoline imposed in subsection 1B shall be determined based on the number of gallons of E-85 gasoline that are distributed in this state during the previous calendar year. The department shall determine the actual tax paid for E-85 gasoline for each period beginning January 1 and ending December 31. The amount of the tax paid on E-85 gasoline during the past calendar year shall be compared to the amount of tax on E-85 gasoline that would have been paid using the tax rate for gasoline imposed in subsection 1 or 1A and a difference shall be established. If this difference is equal to or greater than twenty-five thousand dollars, the tax rate for E-85 gasoline for the period beginning July 1 following the end of the determination period shall be the rate in effect as stated in subsection 1 or 1A.
    Sec. 5.  Section 452A.3, subsection 3, Code 2014, is amended to read as follows:
   3.  a.  For the privilege of operating motor vehicles or aircraft in this state, there is imposed an excise tax on the use of special fuel in a motor vehicle or aircraft. The 
   b.  (1)  Until December 31, 2014, the tax rate on special fuel for diesel engines of motor vehicles is twenty-two and one-half cents per gallon.  For the calendar year beginning January 1, 2015, and each calendar year thereafter, if the amount transferred to the road use tax fund for the fiscal year ending during the immediately preceding calendar year pursuant to section 8.55, subsection 2, is less than two hundred twenty million dollars, the rate of the tax shall be the sum of twenty-two and one-half cents plus the amount of the increase determined by the department pursuant to subsection 1A.
   (2)  The rate of tax on special fuel for aircraft is three cents per gallon.
   (3)  On all other special fuel, unless otherwise specified in this section, the per gallon rate is the same as the motor fuel tax.
   c.  Indelible dye meeting United States environmental protection agency and internal revenue service regulations must be added to fuel before or upon withdrawal at a terminal or refinery rack for that fuel to be exempt from tax and the dyed fuel may be used only for an exempt purpose.
    Sec. 6.  Section 452A.3, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  8.  Annually by December 15, the director shall cause an advisory notice to be published in the Iowa administrative bulletin and in a newspaper of general circulation in this state, stating the rate of taxes to be in effect on or after January 1 of the following year, as established pursuant to subsection 1, subsection 1A, and subsection 3, paragraph “b”. The publication of the rate of tax by the director is exempt from chapter 17A.
    Sec. 7.  APPLICABILITY —— INVENTORY TAX.  Notwithstanding section 452A.85, persons who have title to motor fuel, ethanol blended gasoline, undyed special fuel, compressed natural gas, or liquefied petroleum gas in storage and held for sale on the effective date of an increase in the rate of excise tax imposed on motor fuel, ethanol blended gasoline, or special fuel pursuant to this Act shall not be subject to an inventory tax on the gallonage in storage as provided in section 452A.85 as a result of the tax increases provided in this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill provides additional funding annually for Iowa roads.
   Currently, when the amount of moneys in the Iowa economic emergency fund is equal to the maximum balance allowed by law, the first $60 million of the difference between the actual net revenue for the general fund of the state for the fiscal year and the adjusted revenue estimate for the fiscal year is transferred to the taxpayers trust fund, and any remaining excess funds are transferred to the general fund of the state. This bill provides that after the transfer of $60 million to the taxpayers trust fund, any remaining revenues, up to a maximum of $220 million, shall be transferred to the road use tax fund, and any excess remaining after that shall be transferred to the general fund of the state. The department of management is required to certify to the department of revenue the amount transferred to the road use tax fund. For years in which the amount transferred to the road use tax fund from the economic emergency fund is less than $220 million, the bill provides for an automatic temporary increase in the excise taxes on motor fuel and special fuel for diesel engines of motor vehicles to supplement the amount transferred.
   Under current law, the rate of the excise tax on ethanol blended gasoline and motor fuel other than ethanol blended gasoline is determined according to a distribution percentage formula that expires on June 30, 2014. After that, the rate of the excise tax on all motor fuel will be 20 cents per gallon. The rate of the excise tax on special fuel used in diesel engines of motor vehicles is currently 22.5 cents per gallon. 
   Under the bill, the rate of the excise taxes on motor fuel and special fuel used in diesel engines of motor vehicles will remain at 20 cents per gallon and 22.5 cents per gallon, respectively, provided the amount transferred from the economic emergency fund to the road use tax fund for the fiscal year ending during the immediately preceding calendar year equals $220 million. Beginning January 1, 2015, and each January 1 thereafter, if the amount transferred for the fiscal year ending during the immediately preceding calendar year is less than $220 million, the excise taxes on motor fuel and special fuel for diesel engines of motor vehicles will be temporarily increased for one calendar year at a rate calculated to reach the $220 million target. The department of revenue shall determine the rate of the increase in the excise taxes by calculating the difference between $220 million and the actual amount transferred, dividing the difference by the number of gallons of motor fuel and special fuel for diesel engines of motor vehicles distributed in the state during the fiscal year ending during the immediately preceding calendar year, and rounding that result to the nearest one-half cent. The bill specifies that aviation gasoline is not to be included for purposes of calculating the number of gallons of motor fuel distributed. By operation of law, the rate determined under the bill for motor fuel is also the rate for special fuel that is not for diesel engines of motor vehicles or for aircraft, and under specified circumstances, the rate determined under the bill for motor fuel may also be the rate for E-85 gasoline.
   The bill requires the director of revenue to have an advisory notice published in the Iowa administrative bulletin and in a newspaper of general circulation in the state by December 15 annually stating the rate of the taxes on motor fuel, special fuel for diesel engines of motor vehicles, and other affected fuels to be in effect the following January 1.
   Pursuant to current law, when the rate of excise tax on motor fuel, ethanol blended gasoline, undyed special fuel, compressed natural gas, or liquefied petroleum gas is increased by more than one-half cent per gallon, a person who has title to such fuel held in storage for eventual sale is subject to an inventory tax based on the gallonage in storage at the close of the business day preceding the effective date of the increase. The bill waives that requirement by stating that the inventory tax shall not be imposed as a result of the tax increases provided in the bill.