H.F. _____ Section 1. Section 312.2, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 18. a. The treasurer of state, before 3 making the allotments provided for in this section, shall 4 credit monthly from the road use tax fund to the TIME-21 fund 5 created in section 312A.2 the revenue accruing to the road use 6 tax fund from the excise tax on motor fuel and special fuel for 7 diesel engines of motor vehicles in the amount equal to the 8 revenues collected as follows: 9 (1) For the period beginning July 1, 2014, and ending June 10 30, 2015, the following amounts: 11 (a) The amount of excise tax collected under section 452A.3, 12 subsection 1, paragraph “b” , from three cents per gallon. 13 (b) The amount of excise tax collected under section 452A.3, 14 subsection 3, paragraph “b” , subparagraph (1), from three cents 15 per gallon. 16 (2) For the period beginning July 1, 2015, and ending June 17 30, 2016, the following amounts: 18 (a) The amount of excise tax collected under section 452A.3, 19 subsection 1, paragraph “c” , from six cents per gallon. 20 (b) The amount of excise tax collected under section 452A.3, 21 subsection 3, paragraph “b” , subparagraph (2), from six cents 22 per gallon. 23 (3) Beginning July 1, 2016, the following amounts: 24 (a) The amount of excise tax collected under section 452A.3, 25 subsection 1, paragraph “d” , or, after June 30, 2024, under 26 section 452A.3, subsection 1A, from ten cents per gallon. 27 (b) The amount of excise tax collected under section 452A.3, 28 subsection 3, paragraph “b” , subparagraph (3), from ten cents 29 per gallon. 30 b. This subsection is repealed June 30, 2028. 31 Sec. 2. Section 452A.3, subsections 1 and 1A, Code 2014, are 32 amended to read as follows: 33 1. Except as otherwise provided in this section and in this 34 division , until June 30, 2014 2024 , this subsection shall apply 35 -1- LSB 5606YC (4) 85 dea/sc 1/ 9

H.F. _____ to the excise tax imposed on each gallon of motor fuel used for 1 any purpose for the privilege of operating motor vehicles in 2 this state. 3 a. The rate of the excise tax shall be based on the number 4 of gallons of ethanol blended gasoline that is distributed 5 in this state as expressed as a percentage of the number of 6 gallons of motor fuel distributed in this state, which is 7 referred to as the distribution percentage. For purposes of 8 this subsection , only ethanol blended gasoline and nonblended 9 gasoline, not including aviation gasoline, shall be used in 10 determining the percentage basis for the excise tax. The 11 department shall determine the percentage basis for each 12 determination period beginning January 1 and ending December 13 31. The rate for the excise tax shall apply for the period 14 beginning July 1 and ending June 30 following the end of the 15 determination period. 16 b. The For the period beginning July 1, 2014, and ending 17 June 30, 2015, the rate for the excise tax shall be as follows: 18 (1) If the distribution percentage is not greater than 19 fifty percent, the rate shall be nineteen twenty-two cents for 20 ethanol blended gasoline and twenty twenty-three cents for 21 motor fuel other than ethanol blended gasoline. 22 (2) If the distribution percentage is greater than fifty 23 percent but not greater than fifty-five percent, the rate shall 24 be nineteen twenty-two cents for ethanol blended gasoline and 25 twenty twenty-three and one-tenth cents for motor fuel other 26 than ethanol blended gasoline. 27 (3) If the distribution percentage is greater than 28 fifty-five percent but not greater than sixty percent, the rate 29 shall be nineteen twenty-two cents for ethanol blended gasoline 30 and twenty twenty-three and three-tenths cents for motor fuel 31 other than ethanol blended gasoline. 32 (4) If the distribution percentage is greater than sixty 33 percent but not greater than sixty-five percent, the rate shall 34 be nineteen twenty-two cents for ethanol blended gasoline and 35 -2- LSB 5606YC (4) 85 dea/sc 2/ 9

H.F. _____ twenty twenty-three and five-tenths cents for motor fuel other 1 than ethanol blended gasoline. 2 (5) If the distribution percentage is greater than 3 sixty-five percent but not greater than seventy percent, the 4 rate shall be nineteen twenty-two cents for ethanol blended 5 gasoline and twenty twenty-three and seven-tenths cents for 6 motor fuel other than ethanol blended gasoline. 7 (6) If the distribution percentage is greater than seventy 8 percent but not greater than seventy-five percent, the rate 9 shall be nineteen twenty-two cents for ethanol blended gasoline 10 and twenty-one twenty-four cents for motor fuel other than 11 ethanol blended gasoline. 12 (7) If the distribution percentage is greater than 13 seventy-five percent but not greater than eighty percent, 14 the rate shall be nineteen twenty-two and three-tenths cents 15 for ethanol blended gasoline and twenty twenty-three and 16 eight-tenths cents for motor fuel other than ethanol blended 17 gasoline. 18 (8) If the distribution percentage is greater than eighty 19 percent but not greater than eighty-five percent, the rate 20 shall be nineteen twenty-two and five-tenths cents for ethanol 21 blended gasoline and twenty twenty-three and seven-tenths cents 22 for motor fuel other than ethanol blended gasoline. 23 (9) If the distribution percentage is greater than 24 eighty-five percent but not greater than ninety percent, the 25 rate shall be nineteen twenty-two and seven-tenths cents 26 for ethanol blended gasoline and twenty twenty-three and 27 four-tenths cents for motor fuel other than ethanol blended 28 gasoline. 29 (10) If the distribution percentage is greater than ninety 30 percent but not greater than ninety-five percent, the rate 31 shall be nineteen twenty-two and nine-tenths cents for ethanol 32 blended gasoline and twenty twenty-three and one-tenth cents 33 for motor fuel other than ethanol blended gasoline. 34 (11) If the distribution percentage is greater than 35 -3- LSB 5606YC (4) 85 dea/sc 3/ 9

H.F. _____ ninety-five percent, the rate shall be twenty twenty-three 1 cents for ethanol blended gasoline and twenty twenty-three 2 cents for motor fuel other than ethanol blended gasoline. 3 c. For the period beginning July 1, 2015, and ending June 4 30, 2016, the rate for the excise tax shall be as follows: 5 (1) If the distribution percentage is not greater than 6 fifty percent, the rate shall be twenty-five cents for ethanol 7 blended gasoline and twenty-six cents for motor fuel other than 8 ethanol blended gasoline. 9 (2) If the distribution percentage is greater than fifty 10 percent but not greater than fifty-five percent, the rate 11 shall be twenty-five cents for ethanol blended gasoline and 12 twenty-six and one-tenth cents for motor fuel other than 13 ethanol blended gasoline. 14 (3) If the distribution percentage is greater than 15 fifty-five percent but not greater than sixty percent, the rate 16 shall be twenty-five cents for ethanol blended gasoline and 17 twenty-six and three-tenths cents for motor fuel other than 18 ethanol blended gasoline. 19 (4) If the distribution percentage is greater than sixty 20 percent but not greater than sixty-five percent, the rate 21 shall be twenty-five cents for ethanol blended gasoline and 22 twenty-six and five-tenths cents for motor fuel other than 23 ethanol blended gasoline. 24 (5) If the distribution percentage is greater than 25 sixty-five percent but not greater than seventy percent, the 26 rate shall be twenty-five cents for ethanol blended gasoline 27 and twenty-six and seven-tenths cents for motor fuel other than 28 ethanol blended gasoline. 29 (6) If the distribution percentage is greater than seventy 30 percent but not greater than seventy-five percent, the rate 31 shall be twenty-five cents for ethanol blended gasoline and 32 twenty-seven cents for motor fuel other than ethanol blended 33 gasoline. 34 (7) If the distribution percentage is greater than 35 -4- LSB 5606YC (4) 85 dea/sc 4/ 9

H.F. _____ seventy-five percent but not greater than eighty percent, the 1 rate shall be twenty-five and three-tenths cents for ethanol 2 blended gasoline and twenty-six and eight-tenths cents for 3 motor fuel other than ethanol blended gasoline. 4 (8) If the distribution percentage is greater than eighty 5 percent but not greater than eighty-five percent, the rate 6 shall be twenty-five and five-tenths cents for ethanol blended 7 gasoline and twenty-six and seven-tenths cents for motor fuel 8 other than ethanol blended gasoline. 9 (9) If the distribution percentage is greater than 10 eighty-five percent but not greater than ninety percent, the 11 rate shall be twenty-five and seven-tenths cents for ethanol 12 blended gasoline and twenty-six and four-tenths cents for motor 13 fuel other than ethanol blended gasoline. 14 (10) If the distribution percentage is greater than ninety 15 percent but not greater than ninety-five percent, the rate 16 shall be twenty-five and nine-tenths cents for ethanol blended 17 gasoline and twenty-six and one-tenth cents for motor fuel 18 other than ethanol blended gasoline. 19 (11) If the distribution percentage is greater than 20 ninety-five percent, the rate shall be twenty-six cents for 21 ethanol blended gasoline and twenty-six cents for motor fuel 22 other than ethanol blended gasoline. 23 d. For the period beginning July 1, 2016, and ending June 24 30, 2024, the rate for the excise tax shall be as follows: 25 (1) If the distribution percentage is not greater than 26 fifty percent, the rate shall be twenty-nine cents for ethanol 27 blended gasoline and thirty cents for motor fuel other than 28 ethanol blended gasoline. 29 (2) If the distribution percentage is greater than fifty 30 percent but not greater than fifty-five percent, the rate shall 31 be twenty-nine cents for ethanol blended gasoline and thirty 32 and one-tenth cents for motor fuel other than ethanol blended 33 gasoline. 34 (3) If the distribution percentage is greater than 35 -5- LSB 5606YC (4) 85 dea/sc 5/ 9

H.F. _____ fifty-five percent but not greater than sixty percent, the rate 1 shall be twenty-nine cents for ethanol blended gasoline and 2 thirty and three-tenths cents for motor fuel other than ethanol 3 blended gasoline. 4 (4) If the distribution percentage is greater than sixty 5 percent but not greater than sixty-five percent, the rate shall 6 be twenty-nine cents for ethanol blended gasoline and thirty 7 and five-tenths cents for motor fuel other than ethanol blended 8 gasoline. 9 (5) If the distribution percentage is greater than 10 sixty-five percent but not greater than seventy percent, the 11 rate shall be twenty-nine cents for ethanol blended gasoline 12 and thirty and seven-tenths cents for motor fuel other than 13 ethanol blended gasoline. 14 (6) If the distribution percentage is greater than seventy 15 percent but not greater than seventy-five percent, the rate 16 shall be twenty-nine cents for ethanol blended gasoline and 17 thirty-one cents for motor fuel other than ethanol blended 18 gasoline. 19 (7) If the distribution percentage is greater than 20 seventy-five percent but not greater than eighty percent, the 21 rate shall be twenty-nine and three-tenths cents for ethanol 22 blended gasoline and thirty and eight-tenths cents for motor 23 fuel other than ethanol blended gasoline. 24 (8) If the distribution percentage is greater than eighty 25 percent but not greater than eighty-five percent, the rate 26 shall be twenty-nine and five-tenths cents for ethanol blended 27 gasoline and thirty and seven-tenths cents for motor fuel other 28 than ethanol blended gasoline. 29 (9) If the distribution percentage is greater than 30 eighty-five percent but not greater than ninety percent, the 31 rate shall be twenty-nine and seven-tenths cents for ethanol 32 blended gasoline and thirty and four-tenths cents for motor 33 fuel other than ethanol blended gasoline. 34 (10) If the distribution percentage is greater than ninety 35 -6- LSB 5606YC (4) 85 dea/sc 6/ 9

H.F. _____ percent but not greater than ninety-five percent, the rate 1 shall be twenty-nine and nine-tenths cents for ethanol blended 2 gasoline and thirty and one-tenth cents for motor fuel other 3 than ethanol blended gasoline. 4 (11) If the distribution percentage is greater than 5 ninety-five percent, the rate shall be thirty cents for ethanol 6 blended gasoline and thirty cents for motor fuel other than 7 ethanol blended gasoline. 8 1A. Except as otherwise provided in this section and in this 9 division , after June 30, 2014 2024 , an excise tax of twenty 10 thirty cents is imposed on each gallon of motor fuel used for 11 any purpose for the privilege of operating motor vehicles in 12 this state. 13 Sec. 3. Section 452A.3, subsection 3, Code 2013, is amended 14 to read as follows: 15 3. a. For the privilege of operating motor vehicles or 16 aircraft in this state, there is imposed an excise tax on the 17 use of special fuel in a motor vehicle or aircraft. The 18 b. (1) For the period beginning July 1, 2014, and ending 19 June 30, 2015, the tax rate on special fuel for diesel engines 20 of motor vehicles other than biodiesel blended fuel classified 21 as B-10 or higher is twenty-two twenty-five and one-half cents 22 per gallon. 23 (2) For the period beginning July 1, 2015, and ending June 24 30, 2016, the tax rate on special fuel for diesel engines of 25 motor vehicles other than biodiesel blended fuel classified as 26 B-10 or higher is twenty-eight and one-half cents per gallon. 27 (3) After June 30, 2016, the tax rate on special fuel for 28 diesel engines of motor vehicles other than biodiesel blended 29 fuel classified as B-10 or higher is thirty-two and one-half 30 cents per gallon. 31 (4) The tax rate on biodiesel blended fuel classified 32 as B-10 or higher for diesel engines of motor vehicles is 33 twenty-two and one-half cents per gallon. 34 (5) The rate of tax on special fuel for aircraft is three 35 -7- LSB 5606YC (4) 85 dea/sc 7/ 9

H.F. _____ cents per gallon. 1 (6) On all other special fuel, unless otherwise specified in 2 this section , the per gallon rate is the same as the motor fuel 3 tax. 4 c. Indelible dye meeting United States environmental 5 protection agency and internal revenue service regulations must 6 be added to fuel before or upon withdrawal at a terminal or 7 refinery rack for that fuel to be exempt from tax and the dyed 8 fuel may be used only for an exempt purpose. 9 Sec. 4. APPLICABILITY —— INVENTORY TAX. Notwithstanding 10 section 452A.85, persons who have title to motor fuel, ethanol 11 blended gasoline, undyed special fuel, compressed natural gas, 12 or liquefied petroleum gas in storage and held for sale on 13 the effective date of an increase in the rate of excise tax 14 imposed on motor fuel, ethanol blended gasoline, or special 15 fuel pursuant to this Act shall not be subject to an inventory 16 tax on the gallonage in storage as provided in section 452A.85 17 as a result of the tax increases provided in this Act. 18 EXPLANATION 19 The inclusion of this explanation does not constitute agreement with 20 the explanation’s substance by the members of the general assembly. 21 This bill contains provisions relating to the excise taxes 22 on motor fuel and certain special fuel used in motor vehicles. 23 The bill increases the rate of the excise taxes on motor 24 fuel and special fuel for diesel engines of motor vehicles, 25 other than biodiesel blended fuel classified as B-10 or 26 higher, by three cents beginning July 1, 2014, by an additional 27 three cents beginning July 1, 2015, and by an additional four 28 cents beginning July 1, 2016. The additional revenues shall 29 be credited to the TIME-21 fund, subject to the statutory 30 limitation on annual deposits to that fund. After the repeal 31 of the TIME-21 fund on June 30, 2028, the revenues will accrue 32 to the road use tax fund. 33 The bill provides that the distribution percentage formula 34 for determining the difference in the excise tax imposed on 35 -8- LSB 5606YC (4) 85 dea/sc 8/ 9

H.F. _____ ethanol blended gasoline and motor fuel other than ethanol 1 blended gasoline, which is due to expire on June 30, 2014, is 2 extended until June 30, 2024. 3 Pursuant to current law, when the rate of excise tax on 4 motor fuel, ethanol blended gasoline, undyed special fuel, 5 compressed natural gas, or liquefied petroleum gas is increased 6 by more than one-half cent per gallon, a person who has title 7 to such fuel held in storage for eventual sale is subject to an 8 inventory tax based on the gallonage in storage at the close of 9 the business day preceding the effective date of the increase. 10 The bill waives that requirement by stating that the inventory 11 tax shall not be imposed as a result of the tax increases 12 provided in the bill. 13 -9- LSB 5606YC (4) 85 dea/sc 9/ 9