Brief Description: Modifying the commute trip reduction tax credit.

Sponsors: Senator Jacobsen.

Hearing Date: 4/11/05

Staff: Beth Redfield (786-7347).

Background:

Major employers who employ 100 or more employees in the state's 10 largest counties are required to implement commute trip reduction programs to reduce the number of their employees traveling by single-occupant vehicles to their work sites.

Under the commute trip reduction tax credit program, employers are allowed a business and occupation or public utility tax credit if they provide financial incentives to their employees for ride sharing in car pools, using public transportation, using car sharing, and non-motorized commuting (CTR incentives). Employers may apply for a tax credit of up to $60 per employee per fiscal year or up to 50 percent of the financial CTR incentives, whichever is less. Property managers and other employers may claim a credit for incentives granted employees at their work sites.

The tax credits claimed in a fiscal year may not exceed $2.25 million dollars per fiscal year. By means of Treasurer transfers, the State General Fund is reimbursed for the amount of tax credits from the Multimodal Transportation Account.

Companies apply for the commute trip reduction tax credit throughout the year, at the time they file their returns with the Department of Revenue (DOR). Companies file monthly, quarterly, or annually, depending on the estimated level of business activity. Small companies typically file annually, in the January of the next calendar year. Once the total state amount of credit is met for a fiscal year, credits are no longer granted.

Each fiscal year, no tax credit claimed can be greater than the amount of taxes due or greater than $200,000. Tax credits may not be carried back but may be deferred for up to three years. Under current law, a credit that is deferred applies against the total state amount of credit available in the year the credit is claimed.

The tax credits and grants expire June 30, 2013.

Summary of Bill:

Applications for CTR tax credits must be received in the January following the calendar year in which the company incurred financial CTR incentives. For applications due in January 2006, the application shall not include financial CTR incentives paid from January 1, 2005, through June 30, 2005.

The total amount of state credit available is increased by $500,000 per fiscal year, to $2.75 million.

If the total amount of approved credits exceeds the total state limit, DOR must proportionally reduce the credits for all applicants.

Credits deferred before July 1, 2005, must be claimed as part of the application process, may not be used after June 30, 2008, and are subject to proportional reduction. However, proportional reductions apply first to credits earned in the just completed calendar year and then to deferred credits.

After July 1, 2005, a tax credit may be carried over until it is used. The limitation on the total state amount of tax credit available does not include a credit carried over after July 1, 2005.

The bill is null and void if Senate Bill 6103 (transportation revenue) is not enacted by June 30, 2005.

Appropriation: None.

Fiscal Note: Available.

Effective Date: This bill contains an emergency clause and takes effect July 1, 2005.