2090-s.e

AN ACT Relating to taxation of gasohol; amending 1994 c 225 s 3 (uncodified); reenacting and amending RCW 82.36.2251; adding a new section to chapter 225, Laws of 1994; creating new sections; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section to read as follows is added to chapter 225, Laws of 1994, as section 1.5 thereof, to appear between sections 1 and 2, if that act is submitted to a vote of the people under the operation of section 3 thereof:

The gasohol exemption and credit was created in 1980 to help in-state producers of alcohol. The legislature finds that, for the following reasons, the gasohol exemption and credit granted to motor fuel distributors is not in the best interest of the citizens of the state of Washington:

(1) The federal Clean Air Act requires the use of gasohol or other oxygenated fuels in King, Pierce, Snohomish, Clark, and Spokane counties during fall and winter months, thereby diminishing the need to provide incentives to alcohol producers;

(2) The federal government also provides a fuel tax exemption of up to 5.4 cents per gallon of gasohol;

(3) If continued, the state exemption will cost the state about thirty million dollars per year, the equivalent of a one-cent gasoline tax;

(4) Only three of the seventeen alcohol producers certified to benefit from the exemption in 1993 are located in Washington;

(5) Over ninety percent of the alcohol qualifying for the exemption is provided by out-of-state firms, including several from outside the country;

(6) Gas tax revenue lost because of the exemption is badly needed for state, city, and county transportation projects.

NEW SECTION. Sec. 2. For the reasons enumerated in section 1 of this act, the legislature repealed the tax exemption and credit benefiting gasohol producers by passing ESHB 2326 in 1994. The legislature's position is that section 1 of ESHB 2326, which is the portion of the bill that repealed the tax exemption enjoyed by foreign and domestic companies producing gasohol, is not subject to the requirements of section 13, chapter 2, Laws of 1994 (commonly known as section 13 of I-601) because, among other reasons, existing law RCW 43.135.020(2) excludes highway trust fund revenue from its provisions.

The legislature hereby provides a refund system to be used in lieu of the gasohol tax exemption and credit. Refunds will be disbursed only if an appellate or supreme court of this state invalidates section 1 of ESHB 2326 and the people reject the measure at the November general election.

Sec. 3. RCW 82.36.2251 and 1993 c 268 s 2 are each reenacted and amended to read as follows:

(1) In lieu of the former tax exemption and credit, a distributor is eligible for a refund of the motor fuel tax paid under this chapter on alcohol of any proof that is sold in this state for use as fuel in motor vehicles, farm implements and machines, or implements of husbandry ((~~is exempt from the motor vehicle fuel tax under this chapter~~)) if such alcohol was manufactured by a company that has been verified by the department as having sold less than eight million gallons of alcohol for use as motor fuel in the prior calendar year.

(2) In addition, a tax ((~~credit~~)) refund of sixty percent of the tax rate imposed by RCW 82.36.025 shall be given for every gallon of alcohol receiving ((~~the exemption~~)) a refund under subsection (1) of this section and used in an alcohol-gasoline blend which contains at least nine and one-half percent or more by volume of alcohol: PROVIDED, That in no case may the tax ((~~credit~~)) refund claimed be greater than the tax due on the gasoline portion of the blended fuel: AND PROVIDED FURTHER, That no refunds may be issued to distributors who fail to remit taxes owed under this chapter.

(3) Any tax refunds provided under this section must be made from the gasohol exemption holding account, created under RCW 46.68.090(1)(l). The tax exemption refund will be based upon the difference between the amount of tax collected on the original taxable sale invoice and the rebilled taxable sale invoice that reflects the alcohol that is exempt from the motor fuel tax.

(4) This section shall expire on December 31, 1999.

Sec. 4. 1994 c 225 s 3 (uncodified) is amended to read as follows:

(1) If a court enters a final order invalidating or remanding section 1, chapter 225, Laws of 1994 on the grounds that it does not comply with section 13, chapter 2, Laws of 1994, it is the intent of the legislature that ((~~this measure~~)) chapter 225, Laws of 1994 as amended be submitted to the people for their adoption, ratification, or rejection, at the next succeeding general election to be held in this state, in accordance with Article II, section 1 of the state Constitution, as amended, and the laws adopted to facilitate the operation thereof.

(2) If a court remands this act for a vote of the people, the ballot title shall be substantially as follows: "Shall the alcohol fuel tax exemption given to fuel distributors be eliminated?"

(3) If the voters approve the repeal as provided in section 1 of this act, the repeal shall be made retroactive to May 1, 1994.

NEW SECTION. Sec. 5. No refunds authorized under this act shall be provided until 1994 c 225 is rejected by the people at the next November general election. Any funds received as taxes paid subject to refunds authorized in section 3 of this act shall be deposited in the gasohol exemption holding account. The department of licensing is authorized to issue refunds after 1994 c 225 has been rejected by the people at the next November general election.

NEW SECTION. Sec. 6. If section 1, chapter 225, Laws of 1994 is upheld by order of the court of appeals or the supreme court of this state, this act is null and void.

NEW SECTION. Sec. 7. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately, except for section 2 of this act, which takes effect July 1, 1995.