SENATE BILL REPORT

SB 6080

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.

Brief Summary of Proposed Second Substitute Bill

Extends the retail sales and use tax exemption for clean alternative fuel vehicles by modifying the timing for early termination of it to occur after 10,000 qualifying vehicles are titled in the state, rather than after 7500 qualifying vehicles are titled in the state.

Background: The Legislature exempted certain alternative fuel vehicles, including plug-in EVs, from sales and use taxes in 2005. The exemption was extended in 2011 and 2015, and modified in 2016. Currently, the sales tax exemption applies to up to $32,000 of a vehicle’s selling price and expires when the Department of Licensing (DOL) titles 7500 qualifying vehicles. DOL anticipates reaching this cap by March or April of 2018.

In 2015, the Governor established a goal to increase the number of plug-in EVs in Washington State from approximately 8000 in 2013 to 50,000 by 2020. According to the Department of Transportation, there were approximately 25,000 plug-in EVs registered in Washington as of June 2017.

Under the federal Clean Air Act, states have the option to implement either federal motor vehicle emission standards or California motor vehicle emissions standards for passenger cars, light-duty trucks, and medium-duty vehicles. The motor vehicle emissions standards established by California contain both low-emission and ZEV requirements. In 2005, the Legislature authorized the adoption of California motor vehicle emission standards with the following restrictions:

the Department of Ecology (Ecology) was prohibited from adopting California vehicle emissions standards for medium-duty trucks and California's ZEV regulations; and
Ecology must convene an advisory group of industry and consumer group representatives during rule development and the advisory group must review and comment on proposed rules or changes to rules prior to rule adoption.

Summary of Bill (Proposed Second Substitute): To qualify for this exemption, a vehicle must be purchased or the lease agreement signed by the end of the month following the month in which DOL determines that 10,000, rather than 7500 vehicles eligible for the exemption have been titled in the state since July 15, 2015.

Until the Department of Revenue receives notice from DOL that the cumulative number of 7,5000 qualifying vehicles has been reached, the state treasurer, must transfer from the Multimodal Transportation Account to the general fund a sum equal to the dollar amount that would otherwise have been deposited into the general fund during the prior calendar quarter but for the exemption.

Once the cumulative number of 7,500 qualifying vehicles has been reached, the state treasurer will no longer make any transfers from the Multimodal Transportation Account to the general fund for the purposes of this exemption.

The requirement that if 7,500 qualifying vehicles have not been titled by June 30, 2019, then no additional vehicles will be permitted to qualify after that date is removed.

EFFECT OF CHANGES MADE BY ENERGY, ENVIRONMENT & TECHNOLOGY COMMITTEE (First Substitute):

Adds an effective date for when DOL must begin providing data to JLARC for the tax preference performance statement.
Adds an effective date for when DOR must begin reviewing claims claimed.
Provides a cap on the Multimodal Account backfill amount for the B&O tax and PUT commercial vehicle exemptions. The amount will be limited to the exemptions provided through December 31, 2021, or an aggregate dollar limit of $33 million. The exemptions after this date or over that dollar threshold will come from the Clean Energy Account.
Extends the year leased vehicles can earn credits to 2050.
Extends the year new and leased vehicles can earn credits until 2051.
Adds and amends a PUT credit section which provides a credit for the same activities eligible for the B&O tax credit.
Provides definitions for heavy duty truck, light duty truck, and used.
Requires a vehicle retired under the Charge Ahead Washington Program to be delivered to a licensed vehicle wrecker.
Removes the new eligibility requirement that an EV must predominantly travel within the state of Washington over their usable lifetime.

Staff Summary of Public Testimony on Proposed Substitute (Energy, Environment & Technology): The committee recommended a different version of the bill than what was heard. PRO: Changes to the tax exemptions will improve air quality and reduce environmental impacts. Removing the incentives could negatively affect revenue, which is exactly what happened in Georgia. We appreciate the comprehensive approach of the bill. The program will expand the availability of EVs to lower income household. We also appreciate the adjustments to the building code. It is more cost effective to include the infrastructure during the construction process, rather than trying to retrofit a building.

CON: We support incentivizing EV use and technologies; however, we are concerned about the practicability section. Some of our folks are in the testing phase and are unsure how or if the definition in the bill will be adequate. The provisions in the bill do not provide enough flexibility.

OTHER: We support the bill but have a concern regarding the program. We want to make sure that a traded in vehicle goes to a vehicle recycler that will make sure those vehicles are properly dismantled. We have language to provide to staff. We want to make sure that it is understood that commercial vehicles use different fuels than passenger vehicles.

Persons Testifying (Energy, Environment & Technology): PRO: Senator Guy Palumbo, Prime Sponsor; Joanna Grist, Western Washington Clean Cities Coalition, Puget Sound Clean Air Agency, Forth; Michael Mann, Nissan of North America; Vlad Gutman-Britten, Climate Solutions; Michael Breish, NW Energy Coalition; Meagan Murphy, citizen. CON: Michael Shaw, Washington State Transit Association. OTHER: Bill Fazekas, Black Lake Auto Wrecking; Gary Smith, Auto Recyclers of Washington; James King, Independent Business Association; Bruce Agnew, ACES Northwest Network/Cascadia; Mike Ennis, Association of Washington Business.