Brief ⁽¹⁾

Sub. for HB 2006 would provide a sales tax exemption for the purchases of various public water districts, including indirect purchases made on behalf of such districts by contractors, effective July 1, 2004. Additional language would clarify that the sales tax does not apply to the gross receipts from sales of rural water district benefit units; water system impact or system enhancement or other similar fees; and connection or reconnection fees collected by water suppliers.

Background

The original HB 2006 was introduced by the Special Committee on Assessment and Taxation after an interim study on the topic. The exemption for various public water districts was last approved by the House during the 1999 Session.

The House Committee on Utilities recommended a substitute bill that, in addition to the exemption, would have created a Clean Water Drinking Fund and established a $0.03 fee per thousand gallons of water sold at retail by public water supply systems.

The House Committee of the Whole eliminated all provisions of the substitute bill relating to the new fee; backed up the effective date of the sales tax exemption to July 1, 2004; and added the language clarifying that the tax does not apply to the gross receipts from sales of rural water district benefit units; certain water system fees; and certain connection or reconnection charges.

The fiscal impact of the latter amendment is unknown at this time. The exemption in the original bill, which would not now take effect until July 1, 2004, would reduce receipts as follows:

1. *Supplemental notes are prepared by the Legislative Research Department and do not express legislative intent. The supplemental note and fiscal note for this bill may be accessed on the Internet at http://www.ink.org/public/legislative/fulltext.cgi