SENATE BILL REPORT

SB 6650

BYSenators Metcalf, Patterson, Kreidler and Hansen

Increasing the gasohol tax credit to encourage use of recyclable materials.

Senate Committee on Environment & Natural Resources

Senate Hearing Date(s):February 2, 1988

Majority Report:  Do pass.

      Signed by Senators Metcalf, Chairman; Smith, Vice Chairman; Barr, Benitz, DeJarnatt, Kreidler, Owen, Rinehart.

Senate Staff:Rick Anderson (786-7717)

                  February 11, 1988

AS PASSED SENATE, FEBRUARY 10, 1988

BACKGROUND:

Alcohols, such as methanol and ethanol, can be successfully used as a fuel additive.  "Gasohol", a mixture of 10 percent ethanol and 90 percent gasoline,  can be used in today's cars without modifications.  The use of gasohol has certain advantages to gasoline alone because it replaces lead as an octane enhancer, produces fewer harmful auto emissions, and reduces dependence on foreign oil.

Ethanol has traditionally been produced from various grains, predominately corn.  New technologies are now emerging that economically may produce ethanol from agricultural and municipal wastes. 

The state tax on gasoline is currently 18 cents per gallon. To encourage the production of alcohol for use as gasohol, the Legislature granted a 2.9 cent per gallon credit to the motor vehicle fuel excise tax in 1981.  Several other states, including Idaho and Montana, have granted a credit of 5.0 cent per gallon for the use of alcohol in gasoline.

SUMMARY:

Beginning in July of 1990, the gas tax credit given for the use of alcohol in gasohol will be increased to 5.0 cents per gallon.  The expiration of the tax credit will be extended to December 31, 1997, from December 31, 1992.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 29, 1988

Senate Committee - Testified: Jack Jenkins, Eagle Energy