SENATE BILL REPORT
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
As of March 9, 2020
Title: An act relating to extending the electric marine battery incentive.
Brief Description: Extending the electric marine battery incentive.
Sponsors: Representatives Lekanoff, Fitzgibbon, Leavitt, Doglio, Ramel and Hudgins; by request of Governor Inslee.
Committee Activity: Ways & Means: 3/11/20.
SENATE COMMITTEE ON WAYS & MEANS
Staff: Alia Kennedy (786-7405)
Background: Sales and Use Tax. Retail sales taxes are imposed on retail sales of most articles of tangible personal property, digital products, and some services. A retail sale is a sale to the final consumer or end user of the property, digital product, or service. If retail sales taxes were not collected when the user acquired the property, digital products, or services, then use taxes apply to the value when used in this state. The state, most cities, and all counties levy retail sales and use taxes. The state sales and use tax rate is 6.5 percent. Local sales and use tax rates vary depending on the location.
Vessel Electric Propulsion System Retail Sales and Use Tax Exemption. In 2019, the Legislature established a retail sales and use tax exemption for new battery-powered electric marine propulsion systems with continuous power greater than 15 kilowatts, and new vessels equipped with a battery-powered electric marine propulsion system with continuous power greater than 15 kilowatts.
A battery-powered electric marine propulsion system is a fully electric outboard or inboard motor used by vessels, the sole source of propulsive power of which is the energy stored in the battery packs, including required accessories.
At the end of each quarter, the state treasurer is required to transfer from the Multimodal Transportation Account to the State General Fund the amount that would otherwise have been deposited in the State General Fund if not for this tax exemption.
The tax exemption for vessel electric propulsion systems expires July 1, 2025.
Tax Preference Performance Requirements. State law provides for a range of tax preferences that confer reduced tax liability for certain designated taxpayers. Tax preferences include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits. Unless specifically exempted otherwise, legislation establishing or expanding a tax preference must include a tax preference performance statement identifying its public policy objective and provides certain metrics used by the Joint Legislative Audit and Review Committee (JLARC) in evaluating the effectiveness of the preference. If an exemption or specific expiration date is not provided in the enacting legislation, all new tax preferences automatically expire after ten years.
Summary of Bill: The retail sales and use tax exemption for vessel electric propulsion systems is extended to July 1, 2035.
The exemption is expanded to include the sale of:
batteries and battery packs used to power electric marine propulsion systems with a continuous power greater than fifteen kilowatts; and
new shoreside batteries purchased and installed for the purpose of reducing grid demand when charging electric and hybrid vessels, including the labor and services rendered in respect to installing, repairing, altering, or improving shoreside batteries or shoreline battery infrastructure.
"Battery" is defined as a secondary battery or storage cell that can be charged, discharged into a load, and recharged many times, and includes one of several different combinations of electrode materials and electrolytes.
"Battery pack" is defined as a group of any number of secondary or rechargeable batteries within a casing and used as a power source for battery-powered electric marine propulsion systems.
"Shoreside batteries" is defined as batteries installed at a dock or similar location to provide an electric charge to a vessel powered by an electric marine propulsion system.
"Shoreside batteries infrastructure" is defined as the shoreside battery bank, charging apparatus, and emergency services generator.
The requirement that the state treasurer transfer from the Multimodal Transportation Account to the State General Fund the amount that would otherwise have been deposited in the State General Fund if not for the tax exemption is removed.
If review by JLARC finds that jobs in Washington associated with electric marine battery manufacturing and the construction of new electric ferries using electric battery power are created and retained, then the Legislature intends to extend the expiration date of these tax preferences.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: The bill takes effect on July 1, 2020.