Brief ⁽¹⁾

HB 2010 would impose a time limit of ten years on the property tax exemption for all real and personal property that is used predominantly to produce and generate electricity or heat energy equivalent to at least 1,000 mcf of gas in a given tax year through the use of renewable energy resources or technologies. The definition of "renewable energy resources or technologies" would be amended to include waste incineration. This exemption would apply to the ten taxable years immediately following the taxable year in which the property is first used for that purpose. The ten-year limit would apply to all taxable years beginning with 2001. However, there would be no limit on exemptions for property engaged in generation of electricity prior to July 1, 2001. Existing law does not limit the number of years for property tax exemptions provided for property used to generate electricity through the use of renewable resources or technologies.

HB 2010 also would provide a ten-year property tax exemption for property used exclusively in the production by a Kansas producer of agricultural ethyl alcohol. This exemption would apply to the ten taxable years immediately following the taxable year in which the property is first used for that purpose. The ten-year limit would apply to all taxable years beginning with 2001.Existing law provides no property tax exemption for such production.

Background

The property tax exemption for renewable resource generation facilities was enacted in 1999, as part of SB 45. The ten-year limit was recommended by the Special Committee on Utilities in its consideration of ethanol and renewable energy issues. Representative Dennis McKinney testified in support of the bill.

The House Utilities Committee's amendment would have the effect of "grandfathering in" the Bowersock generating facility in Lawrence which uses hydropower and the two wind turbines owned by Western Resources and Utilicorp.

The House Committee of the Whole further amended the bill to include the production and generation of electricity or heat energy through renewable energy resources. Waste incineration would be an acceptable means of producing energy for a facility to qualify for a property tax exemption. The House Committee of the Whole also amended the bill to provide for a ten-year property tax exemption for ethanol production. This exemption was recommended by the Special Committee on Utilities in its consideration of ethanol and renewable energy issues. This amendment is similar, but not identical, to the provisions of HB 2008.

In its fiscal note on the introduced version of the bill, the Department of Revenue reported it was unable to determine a fiscal impact when SB 45 was passed during the 1999 Session but stated at the time that the impact would not be significant.

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