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Minutes for HB2763 - Committee on Taxation
Short Title
Providing an income tax credit for the sale and distribution of ethanol blends for motor vehicle fuels.
Minutes Content for Tue, Mar 12, 2024
Chairperson Smith opened the hearing for HB2763.
Adam Siebers, Assistant Revisor, Kansas Office of Revisor Statutes, provided an overview for HB2763 that provides for an income tax credit for the sale and distribution of ethanol blends for motor vehicles. The total amount of tax credits issued pursuant to HB2763 shall not exceed $5.0 million per tax year Attachment 1). Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for HB2763 that would create a new non-refundable income tax credit for a retail dealer that sells higher ethanol blend at their service station or a distributor that sells higher ethanol blend directly to the final user located in the state. The Department of Revenue indicates that it does not have data on retail sales of qualifying higher ethanol blend fuel to estimate the fiscal impact of HB2763. If the new credit is fully utilized, the bill would reduce State General Fund revenues by $5.0 million per tax year. Ms. Smith stood for questions from Committee members.
Proponents:
Josh Roe, CEO, Kansas Corn Growers Association, testified as a proponent for HB2763 stating the following three highlights to the main beneficiaries are the consumer, the agricultural producer, and the environment if higher blends of ethanol are expanded in the state. The minimum of about 95.0 percent of the fuel sold in the United States contains at least 10.0 percent ethanol and 15.0 percent has been approved since 2016. The expansion of ethanol demand is vital to the future of rural Kansas. In the past five years, an average of 34.0 percent of the corn produced in Kansas has been utilized for ethanol produce, approximately equal to the amount of corn that goes directly to livestock. (Attachment 2)
Brett Grauerholz, Grauerholz Farms, testified as a proponent for HB2763 and how this bill affects farms on agricultural production. The past two years have brought numerous challenges on farming with yields far below normal along with inflation, increased input prices, interest rates and the prospect for below average prices. HB2763 will serve as a catalyst to expand higher-level blends of ethanol across the state benefiting fuel retailers, agriculture producers and the Kansas consumer. (Attachment 3)
Randy Stookey, Renew Kansas Biofuels Association, testified as a proponent for HB2763 noting the $5.0 million tax credit for the ethanol industry is an investment for the state of Kansas. It is not just the retailers that will directly benefit from the $5.0 million investment but approximately a third of the corn and sorghum grown in Kansas is used for the ethanol industry. If there is an increase through incentivizing retailers to put this at a lower cost and better product out for consumers to purchase, this can motivate investment in the ethanol facilities. The money would flow back through not just the farmers but the increase for demand of corn and sorghum would come back into what is continuing to be a struggling Kansas rural economy. (Attachment 4)
Brian Posler, Fuel True Independent Energy and Convenience, testified as a proponent for HB2763. Fuel True is a nonprofit statewide association representing the independent Kansas energy distribution companies and serves as the voice of over 2000 fuel retailers throughout Kansas. He noted many of the members operate convenience stores in small towns throughout Kansas which serve as grocery stores in their community, and without them, areas of rural Kansas would become food deserts. The income tax credit for the retail dealer that sells the higher ethanol blend will serve the market demand and helps the convenience stores to survive. (Attachment 5)
Steve Seabrook, Vice President of Commercial Relations for POET Biofuels, testified as a proponent for HB2763. POET Biofuels is the world's largest biofuel producer and buys approximately 7.0 percent of the U.S. corn crop and markets fuel for forty-three ethanol facilities across the Midwest including three independent producers in Kansas. HB2763 will provide a five-cent per gallon tax incentive to Kansas fuel retailers on each gallon of E15 and higher blends sold. Increasing access to E15 fuels will help farm incomes, generate more state and local tax revenues, and grow capital investments across the state of Kansas. (Attachment 6)
The conferees stood for questions from Committee members.
Written testimony was submitted by the following as proponents for HB2763:
Derek Peine, Western Plains Energy, LLC (Attachment 7)
Chris Bliley, Growth Energy, (Attachment 8)
Written testimony was submitted by the following as neutral to HB2763.
Jeff Earl and Kaleb Little, Clean Fuels & Kansas Soybean Association, (Attachment 9)
There were no opponents for HB2763.
Chairperson Smith closed the hearing for HB2763.
