HBA-RBT H.B. 2567 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2567
By: Cuellar
Ways & Means
4/1/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, there are state and federal requirements to operate certain
vehicles on alternative fuels. A person or company purchasing a vehicle
capable of operating on alternative fuels or retrofitting vehicles to run
on alternative fuels pays a premium for the vehicle as compared to the same
vehicle manufactured to operate on gasoline or diesel.  The price
differential exists due to the relatively small number of vehicles
manufactured to operate on alternative fuels, as well as the cost of the
additional equipment used in retrofitting a vehicle to run on propane or
natural gas. 

Accordingly, in an effort to comply with clean air requirements or to save
money by using alternative fuels like propane and natural gas, which are
cheaper domestic fuels, for a person or company faces a higher sales tax
liability. The higher sales tax liability acts as a disincentive for use of
alternative fuels vehicles.  

Additionally, persons operating liquefied gas-propelled motor vehicles pay
the comptroller of public accounts (comptroller) between $30 and $744
annually through a decal tax, depending on the weight of and distance
traveled by a given vehicle.  Liquefied gas includes compressed natural gas
(CNG), liquefied natural gas (LNG), and liquefied petroleum gas (propane). 

A sales tax exemption could encourage conversion to alternative fuels.  A
liquefied gas tax exemption would also provide incentives for the purchase
and use of natural gas and propane vehicles. 

Many local government and private fleets are interested in using
clean-burning alternative fuels, but often lack the funds necessary to pay
the initial investment for these vehicles.  Also, since the alternative
fuels refueling infrastructure in Texas is not fully developed, funds are
needed to build more refueling facilities to accommodate growing fleets.
Counties throughout the state could use the funds generated by the
additional "local-option" vehicle registration fee authorized by this bill
to fund alternative fuels projects supported by their communities,
including, but not limited to, fleet conversions and building refueling
stations. 

H.B. 2567 creates incentives for the use of alternative-fueled vehicles and
for the development of projects that promote alternative fuels.  This bill
exempts for four years all persons and entities, whether public or private,
from paying:  a sales tax on the difference in price between an original
equipment manufacturer (OEM) vehicle that runs on gasoline or diesel and
one that is manufactured to run on natural gas, propane, ethanol, methanol,
or electricity; a sales tax on the cost of materials for retrofitting a
conventionally fueled vehicle to run on natural gas, propane, ethanol,
methanol, or electricity; a sales tax on qualified clean-fuel vehicle
refueling property; and the decal tax on vehicles that are propelled by
liquefied gas.  These exemptions serve as incentives for the purchase of
alternative fuel vehicles and building of refueling infrastructure. 

Additionally, this bill creates a funding source for alternative fuels
projects in counties that choose to implement them.  It helps develop
alternative fuel markets in counties that have air-quality problems or a
strong interest in alternative fuels but that lack local matching funds.
Counties could leverage money in clean-fuels funds by matching federal
Congestion Mitigation and Air Quality (CMAQ) or other grants, such as State
Energy Conservation Office grants. 


 RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter H, Chapter 151, Tax Code, by adding Sections
151.333 and 151.3335, as follows: 

Sec.  151.333.  PROPERTY USED TO CONVERT MOTOR VEHICLE TO USE CLEAN FUEL.
Defines "clean-burning fuel" and "qualified clean-fuel vehicle property."
Provides that the tax imposed by this chapter does not apply to the sale of
qualified clean-fuel vehicle property used to convert a motor vehicle
property used to convert a motor vehicle so that the vehicle can be
propelled using a clean-burning fuel either exclusively or interchangeably
with another motor fuel.  Provides that this section applies only to the
conversion of a motor vehicle that was manufactured not earlier than the
1996 model year.  Provides that this section expires September 30, 2003.   

Sec.  1151.3335.  CLEAN-FUEL VEHICLE REFUELING PROPERTY.  Defines
"qualified clean-fuel vehicle refueling property."  Provides that the taxes
imposed by this chapter do not apply to qualified clean-fuel vehicle
refueling property.  Provides that this section expires September 30, 2004. 

SECTION 2.  Amends Subchapter E, Chapter 152, Tax Code, by adding Section
152.094, as follows: 

Sec.  152.094.  MOTOR VEHICLES PROPELLED BY CLEAN-BURNING FUEL.  Defines
"clean-burning fuel" and "qualified clean-fuel vehicle property."  Provides
that the tax imposed by this chapter does not apply to a motor vehicle that
is also qualified clean-fuel vehicle property and that is propelled using a
clean-burning fuel either exclusively or interchangeably with another motor
fuel.  Provides that this section applies only to a motor vehicle that was
manufactured not earlier than the 1997 model year.  Provides that this
section expires September 30, 2003.   

SECTION 3.  Amends Subchapter D, Chapter 153, Tax Code, by adding Sections
153.3022 and 153.3035, as follows: 

Sec.   153.3022.  TEMPORARY EXEMPTION.  Provides that the tax imposed by
this chapter does not apply to the sale or use of liquefied gas to propel a
motor vehicle on the public highways of this state if the person registers
under Section 153.305 and pays the fee required by that section.  Provides
that this section applies regardless of whether the person owning the motor
vehicle would otherwise pay the tax directly to a dealer or through the
purchase of a liquefied gas tax decal permit.  Provides that this section
expires September 30, 2003. 

Sec.  153.3035.  REGISTRATION FOR TEMPORARY EXEMPTION.  Provides that a
person who owns a motor vehicle equipped to use liquefied gas must register
that motor vehicle with the comptroller in accordance with this section to
be eligible for the temporary exemption provided by Section 153.3022.
Requires the comptroller to charge a $10 fee for each motor vehicle
registered under this section.  Sets forth the information which must be
included in the registration.  Provides that a person who registers under
this section is not required to obtain any permit otherwise required by
this subchapter or to submit any report otherwise required by this
subchapter.  Provides that this section expires September 30, 2003.  

SECTION 4.  Amends Subchapter D, Chapter 502, Transportation Code, by
adding Section 502.1735, as follows: 

Sec.  502.1735.  OPTIONAL COUNTY FEE FOR ALTERNATIVE FUEL PROJECTS.  (a)
Defines "alternative fuel." 

(b) Authorizes the commissioners court of a county to impose by order an
additional fee of not more than $2 for registering a vehicle in the county. 

(c) Authorizes the registration of a vehicle that may be registered under
this chapter without payment of a registration fee, in a county imposing a
fee under this section, without payment of the additional fee. 

(d) Provides that a fee imposed under this section may take effect only on
January 1 of a year.  Provides that the county must adopt the order and
notify the Department of Transportation (department) not later than
September 1 of the year preceding the year in which the fee takes effect. 

(e) Authorized the removal of a fee imposed under this section.  Authorizes
the removal to take effect only on January 1 of a year.  Authorizes a
county to remove the fee only by rescinding the order imposing the fee and
notifying the department not later than September 1 of the year preceding
the year in which the removal takes effect. 

(f) Requires the county assessor-collector imposing a fee under this
section to collect the additional fee for a vehicle when other fees imposed
under this chapter are collected. 

(g) Authorizes a county imposing a fee under this section to deduct for
administrative costs an amount of not more than five percent of the revenue
it receives from the fee. Requires the county making the deductions
provided for by this subsection to deposit the remainder of the fee revenue
in a separate fund in the county treasury to be administered by the
commissioners court. 

(h) Authorizes a county to use the revenue in the separate fund only to
provide competitive grants to support the development of projects,
technology, and infrastructure related to the use of alternative motor
fuels and alternative fueled vehicles, including the conversion or purchase
of alternative fueled vehicles. 

(i) Requires the commissioners court to adopt rules and develop forms
necessary to administer this section not later than the 90th day after the
date on which the court adopts an order imposing the fee. 

SECTION 5.  Effective date: September 1, 1999.
            Makes application of this Act prospective.

SECTION 6.  Emergency clause.