BILL REQ. #:  H-5488.1 

Read first time 02/11/08.   Referred to Committee on Finance.

     AN ACT Relating to tax incentives to encourage businesses to purchase highly energy efficient equipment; adding a new section to chapter 82.04 RCW; creating a new section; providing an effective date; and providing an expiration date.

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

NEW SECTION.  Sec. 1   The legislature finds that improving energy efficiency is key to achieving the state's goals to reduce greenhouse gas emissions to 1990 levels by 2020. The legislature further finds that increased energy efficiency saves Washington businesses money, which in turn helps the state and local economy, as energy bill savings can be spent on local goods and services. Washington state and federal appliance standards passed since 2005 will produce about eighty thousand metric tons of greenhouse gas emissions savings toward Washington's 2020 target. However, there are a large number of commercial devices on the market that are not subject to those standards. In addition, there are many new products on the market that are much more energy efficient than required by such standards, but because they may be more expensive than standard models, they represent only a small percentage of sales. Most commercial equipment, once purchased, will be in use for ten to fifteen years; therefore, the more energy efficient they are, the greater the energy and cost savings and reductions in climate pollution.
     Thus, the legislature intends to enact tax incentives as a means to encourage Washington businesses to purchase certain high efficiency appliances and equipment and to maximize the energy savings opportunity available through increased and sustained market share of those appliances and equipment.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed in an amount equal to the state and local sales and use taxes paid on the following items:
     (a) Commercial freezers and refrigerators meeting consortium for energy efficiency tier 2 specifications dated July 31, 2007;
     (b) High efficiency commercial clothes washers meeting consortium for energy efficiency specifications dated November 14, 2007;
     (c) Commercial ice makers meeting consortium for energy efficiency specifications dated January 1, 2006;
     (d) Commercial full-sized gas convection ovens with interior measurements of six cubic feet or larger;
     (e) Commercial deep fat fryers which are rated energy star as of August 2003;
     (f) Commercial hot food holding cabinets which are rated energy star as of August 2003; and
     (g) Commercial electric and gas steam cookers, also known as compartment cookers, which are rated energy star as of August 2003.
     (2) A person may not take the credit under this section if the person's gross income of the business in the prior calendar year exceeded seven hundred fifty thousand dollars.
     (3) A credit earned during one calendar year may be carried over to be credited against taxes incurred in a subsequent calendar year. No refunds shall be granted for credits under this section.
     (4) Credits are available on a first-in-time basis. The department shall disallow any credits, or portion thereof, that would cause the total amount of credits claimed statewide under this section in any year to exceed seven hundred fifty thousand dollars. If the seven hundred fifty thousand dollar limitation is reached, the department shall provide written notice to any person that has claimed tax credits after the seven hundred fifty thousand dollar limitation in this subsection has been met. The notice shall indicate the amount of tax due and shall provide that the tax be paid within thirty days from the date of such notice. The department may not assess penalties and interest as provided in chapter 82.32 RCW on the amount due in the initial notice if the amount due is paid by the due date specified in the notice, or any extension thereof.
     (5) The department of community, trade, and economic development must prepare and deliver a report to the legislature no later than December 30, 2010, assessing the overall energy and cost saving impacts of this section.
     (6) Credit may not be claimed under this section for the acquisition of an item, listed in subsection (1) of this section, before the effective date of this section.
     (7) Credit may not be claimed under this section for the acquisition of an item, listed in subsection (1) of this section, after June 30, 2010.
     (8) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a)(i) "Commercial refrigerators and freezers" means refrigerators, freezers, or refrigerator-freezers designed for use by commercial or institutional facilities for the purpose of storing or merchandising food products, beverages, or ice at specified temperatures that: (A) Incorporate most components involved in the vapor-compression cycle and the refrigerated compartment in a single cabinet; and (B) may be configured with either solid or transparent doors as a reach-in cabinet, pass-through cabinet, roll-in cabinet, or roll-through cabinet.
     (ii) "Commercial refrigerators and freezers" does not include: (A) Products with eighty-five cubic feet or more of internal volume; (B) walk-in refrigerators or freezers; (C) consumer products that are federally regulated pursuant to Title 42 U.S.C. Sec. 6291 et seq.; (D) products without doors; or (E) freezers specifically designed for ice cream.
     (b) "Commercial clothes washer" means a soft mount horizontal or vertical-axis clothes washer that: (i) Has a clothes container compartment no greater than three and one-half cubic feet in the case of a horizontal-axis product or no greater than four cubic feet in the case of a vertical-axis product; and (ii) is designed for use by more than one household, such as in multifamily housing, apartments, or coin laundries.
     (c) "Commercial hot food holding cabinet" means an appliance that is designed to hold hot food at a specified temperature, which has been cooked using a separate appliance.
     (d) "Commercial ice maker" means a factory-made assembly, not necessarily shipped in one package, consisting of a condensing unit and ice-making section operating as an integrated unit with means for making and harvesting ice. It may also include integrated components for storing or dispensing ice, or both.
     (e) "Commercial open, deep-fat fryer" means an appliance, including a cooking vessel, in which oil is placed to such a depth that the cooking food is essentially supported by displacement of the cooking fluid rather than by the bottom of the vessel. Heat is delivered to the cooking fluid by means of an immersed electric element or band-wrapped vessel (electric fryers), or by heat transfer from gas burners through either the walls of the fryer or through tubes passing through the cooking fluid (gas fryers).
     (f) "Consortium" means the consortium for energy efficiency, a United States nonprofit public benefits corporation that promotes the manufacture and purchase of energy efficient products and services. The consortium's members include utilities, statewide and regional market transformation administrators, environmental groups, research organizations, and state energy offices in the United States and Canada.
     (g) "Energy star" is an energy efficient product that meets the federal environmental protection agency's and federal department of energy's criteria for use of the energy star trademark label, or is in the upper twenty-five percent of efficiency for all similar products as designated by the federal energy management program. Energy star is a voluntary labeling program designed to identify and promote energy efficient products to reduce greenhouse gas emissions.
     (h) "Steam cooker" means a device with one or more food steaming compartments, in which the energy in the steam is transferred to the food by direct contact. Models may include countertop models, wall-mounted models, and floor models mounted on a stand, pedestal, or cabinet-style base.

NEW SECTION.  Sec. 3   This act takes effect July 1, 2008.

NEW SECTION.  Sec. 4   This act expires July 1, 2010.