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Minutes for HB2012 - 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 Mon, Jan 27, 2025
Chairperson Smith opened the hearing for HB2012.
Adam Siebers, Revisor of Statutes, provided an overview for HB2012 that provides an income tax credit for the sale and distribution of ethanol blends for motor vehicles (Attachment 1).
Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for HB2012 noting the department indicates that it does not have data on retail sales of qualifying higher ethanol blend fuel to accurately estimate the fiscal effect of HB2012. If the new credit is fully utilized, the bill would reduce the State General Fund revenues by $5.0 million per tax year beginning in tax year 2026 or FY 2027.
In response to Representative Xu's question, Ms. Smith noted if there was an application process involved in the bill, Kansas Department of Revenue would be able to process the applications as they come in. If no applications are used, income tax returns would be processed as they come in. There would be some people who would not receive the credit if the Department has met the $5.0 million cap.
Proponents:
Representative Rahjes, 110th District, testified as a proponent for HB2012 that would provide an incentive for fuel retailers to offer E15 and higher blends of ethanol at their facilities. The income tax credit of 0.5 cents per gallon of the higher blends sold by a dealer could be claimed in tax years 2026 to 2031. (Attachment 2)
Representative Rahjes stood for questions from Committee members.
David VanderGriend, CEO, ICM, Inc.,testified as a proponent for HB2012 stating the ICM company is located in Colwich, Kansas which designs fuel ethanol plants in the state of Kansas. He noted the environment benefits of ethanol's octane content is the reduction of toxic aromatics such as toluene, benzene and xylene which are no longer required to meet the octane standards. (Attachment 3
Trae Green, Renew Kansas Biofuels Association, testified as a proponent for HB2012 stating due to the promotion of liquid biofuels, the opportunity for consumers to save money at the fuel pumps and the investment in our rural economics represents investments in Kansas and rural economies. (Attachment 4)
Kaleb Little, Kansas Soybean Association, testified as a proponent for HB2012 and the opportunity to introduce a companion bill related to biodiesel and renewable diesel that mirrors HB2012. The proposed companion bill creates a non-refundable income tax credit for retailers or distributors of higher biodiesel and renewable diesel blended fuels to the final user. (Attachment 5) (Attachment 6)
Josh Roe, Kansas Corn Growers, testified as a proponent for HB2012 noting the bill will lead to direct benefits for the struggling farm economy in terms of increased incomes and the benefits to consumers of lower fuel prices. HB2012 will encourage the adoption of higher-level blends of ethanol that will provide economic and environmental benefits to the state of Kansas. (Attachment 7)
Brett Grauerholz, Farmer, Republic, Kansas, testified as a proponent for HB2012 that would directly benefit the Kansas corn farmer. With passage of the bill, there are greater chances to see local demand for ethanol drive the markets higher. The extra income will be spent in our rural communities, restaurants and supports the next generation in our Kansas schools. (Attachment 8)
Steve Seabrook, POET Biofuels, testified as a proponent for HB2012 noting ethanol is the cheapest octane in the world. Mr. Seabrook stated 5 percent of ethanol stays in Kansas and 70 percent is exported out of the state. Last year, Americans saved an average of .26 cents per gallon with E15 compared to the standard E10 gasoline with savings reaching .40 to .60 cents per gallon in some states.(Attachment 9)
Phillip Near, President Jump Start Stores, Inc., testified as a proponent for HB2012 noting with the passage of the ethanol tax credit, he will be able to continue to invest in Kansas. Ethanol is more cost effective than regular unleaded gas and also better for the environment and economy. (Attachment 10)
Brian Posler, Fuel True Independent Energy and Convenience, testified as a proponent for HB2012 represent and serves 2,000 fuel retailers throughout Kansas. Kansans would benefit from additional higher ethanol blends for those less expensive fuels at the pump. It is very expensive for retailers to add the higher blends with capital costs for new tanks, lines and pumps. (Attachment 11)
The proponents stood for questions from Committee members.
Written testimony was submitted by the following as proponents for HB2012:
Adam York, CEO, Kansas Sorghum Producers (Attachment 12)
Chris Bliley, Growth Energy, (Attachment 13)
Claudia Hissong, Kansas Farm Bureau, (Attachment 14)
Derek Peine, CEO of Western Plains Energy, LLC, (Attachment 15)
Shahira Stafford, Kansas Cooperative Council, (Attachment 16)
Matthew T. Steele, Ph.D., P.E.,Steele Engineering, LLC, (Attachment 17)
Cheryl Near, Citizen of Kansas, (Attachment 18)
Jeffrey Earl, Clean Fuels, Alliance America, (Attachment 19)
Chairperson Smith closed the hearing for HB2012.
