| TO: | Honorable Steve Ogden, Chair, Senate Committee on Finance |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | SB1936 by Van de Putte (Relating to exempting fuel ethanol blended with gasoline from the motor fuels tax.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2008 | ($27,898,000) |
| 2009 | ($30,752,000) |
| 2010 | ($31,042,000) |
| 2011 | ($31,667,000) |
| 2012 | ($32,312,000) |
| Fiscal Year | Probable Revenue Gain/(Loss) from AVAILABLE SCHOOL FUND 2 |
Probable Revenue Gain/(Loss) from STATE HIGHWAY FUND 6 |
|---|---|---|
| 2008 | ($27,898,000) | ($83,695,000) |
| 2009 | ($30,752,000) | ($92,255,000) |
| 2010 | ($31,042,000) | ($93,127,000) |
| 2011 | ($31,667,000) | ($95,000,000) |
| 2012 | ($32,312,000) | ($96,936,000) |
The bill would amend Chapter 162 of the Tax Code to provide an exemption from the gasoline tax for certain fuel ethanol.
Under the bill, the gasoline tax would not apply to the volume of fuel ethanol blended together with taxable gasoline when the finished product sold or used was clearly identified on the sales invoice as a combination of gasoline and fuel ethanol.
The bill would take effect September 1, 2007.
This note is based upon analyses made by the Comptroller's Office.
Currently, the volume of fuel ethanol blended with taxable gasoline is subject to the gasoline tax of 20 cents per gallon. A determination was made of the gallons of fuel ethanol that are currently blended with taxable gasoline in Texas. Both the fuel ethanol used in Environmental Protection Agency (EPA) designated ozone nonattainment areas as well as the fuel ethanol used in the entire state in E-85 motor fuel were used in the determination of total gallons. E-85 is an alcohol fuel mixture that typically contains a mixture of up to 85 percent denatured fuel ethanol and gasoline. An allowance was made for the growth in use of fuel ethanol. The 20 cents per gallon tax rate was applied to the effected gallons of fuel ethanol.
The estimate for fiscal 2008 was adjusted for the statutory lag in motor fuel tax remittances. The change in revenues was then subjected to the statutory allocation of gasoline taxes.
Note: As of March 14, 2007, the metropolitan statistical areas of San Antonio and Austin-Round Rock have been designated by the Texas Commission on Environmental Quality Office of Policy and Regulatory Development as "near-ozone nonattainment areas." It is uncertain which near-nonattainment areas, if any, will ultimately be designated by the EPA as nonattainment areas. However, if both San Antonio and Austin-Round Rock received an EPA designation as nonattainment areas and had to begin using gasoline oxygenated with fuel ethanol, the losses in gasoline tax revenue to the state shown below would increase by $33 million in 2008, $33.3 million in 2009, $33.6 million in 2010, $34.2 million in 2011, and $34.8 million in 2012. These amounts would be subject to the statutory gasoline tax allocation.
| Source Agencies: | 304 Comptroller of Public Accounts
|
| LBB Staff: | JOB, SD, CT
|