2008 Legislative Session _ 2008

Committee: Senate Taxation
Wednesday, February 06, 2008

                                            P - Present
                                            E - Excused
                                            A - Absent

Roll Call
P    Duenwald
P    Hansen (Tom)
P    Jerstad
P    Koetzle
P    Napoli
P    Peterson (Jim)
P    Turbak Berry
P    Lintz, Vice-Chair
P    McNenny, Chair

OTHERS PRESENT: See Original Minutes

The meeting was called to order by Chair McNenny.

MOTION:     TO APPROVE THE MINUTES OF MONDAY, JANUARY 30, 2008

Moved by:    Lintz
Second by:    Hansen (Tom)
Action:    Prevailed by voice vote.

         HB 1005: revise certain provisions concerning the assessment of real property, to assess agricultural land based on its agricultural income value, to create an implementation and oversight advisory task force, to repeal certain provisions regarding the assessment of property, and to repeal the nonagricultural acreage classification.

Presented by:    Senator Dave Knudson
Proponents:    Representative Larry Rhoden
        Michael Kenyon, Department of Revenue and Regulation
        Wayne Soren, SD Farmers Union

        Kirk Chaffee, SD Assessing Officers Assn.
        Angela Ehlers, SD Assoc. Of Conservation Districts
        Matt McCaulley, SD Corn Growers Assn.
        Rick Vallery, SD Wheat Inc.
        Kenny Fox, SD Stockgrowers Assn.
        Brenda Forman, SD Assn. Of Co-Ops/Ag. Unity & SD Cattlemen's Association
        Michael Held, SD Farm Bureau
        David Owen, SD Chamber of Commerce & Industry (Handout #1)
        Shawn Lyons, SD Retailers Association

Opponents:    Representative Al Novstrup (Handout #2)
              Mary Worlie, Director of Equalization for Brown County & Assessing Officers Assn. (Handout #3)
        Joyce Dragseth, Director of Equalization, Brookings County & SD Assessing Officers Assn.

MOTION:     DO PASS HB 1005

Moved by:    Duenwald
Second by:    Lintz
Action:    Prevailed by roll call vote. (6-3-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Jerstad, Peterson (Jim), Lintz, McNenny

Voting No:    Koetzle, Napoli, Turbak Berry

         HB 1006: revise certain tax levy limitations and property tax levies for school districts.

Presented by:    Senator Dave Knudson
Proponents:    Michael Kenyon, Department of Revenue and Regulation
Opponents:    Dick Tieszen, Associated School Boards of SD & Sioux Falls School District (Handout #4)
        
MOTION:     DO PASS HB 1006

Moved by:    Jerstad
Second by:    Hansen (Tom)
Action:    Prevailed by roll call vote. (7-2-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Jerstad, Napoli, Peterson (Jim), Lintz, McNenny
Voting No:    Koetzle, Turbak Berry

         SB 116: revise certain provisions concerning the assessment of real property, to assess agricultural land based on its agricultural income value, to create an implementation and oversight advisory task force, to repeal certain provisions regarding the assessment of property, and to repeal the nonagricultural acreage classification.

Presented by:    Senator Dave Knudson

MOTION:     DO PASS SB 116

Moved by:    Duenwald
Second by:    Lintz
Action:    Prevailed by roll call vote. (6-3-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Jerstad, Peterson (Jim), Lintz, McNenny

Voting No:    Koetzle, Napoli, Turbak Berry

         SB 117: revise certain tax levy limitations and property tax levies for school districts.

Presented by:    Senator Dave Knudson

MOTION:     DO PASS SB 117

Moved by:    Lintz
Second by:    Peterson (Jim)
Action:    Prevailed by roll call vote. (7-2-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Jerstad, Peterson (Jim), Turbak Berry, Lintz, McNenny

Voting No:    Koetzle, Napoli

MOTION:     RECONSIDER SB 110

Moved by:    Lintz
Second by:    Napoli
Action:    Prevailed by roll call vote. (5-4-0-0)

Voting Yes:    Duenwald, Hansen (Tom), Napoli, Lintz, McNenny
Voting No:    Jerstad, Koetzle,, Peterson (Jim), Turbak Berry

         SB 110: provide increased funding for the maintenance of state highways and roads by eliminating the tax differential between ethanol blends and motor fuel through an increase in the fuel excise tax rate on ethanol blends.

MOTION:     AMEND SB 110

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On the printed bill, delete everything after the enacting clause and insert:

     "      Section 1. That subdivision (2) of § 10-47B-3 be amended to read as follows:

             (2)      "Blender," a person engaged in the activity of making blends or purchasing ethyl alcohol for resale to other blenders . A licensed blender may purchase denatured ethyl alcohol untaxed if the alcohol has not previously been blended with gasoline. A person need not be a blender to import or export an ethanol blend or purchase a fuel invoiced as a ten percent an ethanol blend, M85 , or E85 from a licensed supplier if the ethyl alcohol and the gasoline are both loaded over a terminal rack and invoiced as a blended product , or purchased as a blended product from a licensed blender. A retail dealer that sells any motor fuel utilizing a blender pump is a blender. A person need not be a blender to mix two or more substances which have previously been subject to the fuel excise tax imposed by this chapter, or two or more substances which have not been subject to the fuel excise tax imposed by this chapter , if the mixed product does not result in producing a motor fuel or special fuel;

     Section 2. That § 10-47B-3 be amended by adding thereto a NEW SUBDIVISION to read as follows:

             (2A)    "Blender pump," a pump provided by the retail dealer that allows the end user to choose the ratio of ethyl alcohol to gasoline to be dispensed at the pump. The blender pump may offer several ratios of ethyl alcohol blends containing a minimum of ten percent of ethyl alcohol by volume. The blender pump may blend gasoline, ethanol blend, E85 blend, M85 blend, ethyl alcohol, or any other substance, and may blend any combination of gasoline, ethanol blend, E85 blend, M85 blend, ethyl alcohol, or any other substance;

     Section 3. That subdivision (3) of § 10-47B-3 be amended to read as follows:

             (3)      "Blends," one or more petroleum product, mixed with or without another product, regardless of the original character of the product blended, if the product obtained by the

blending is capable of use in the generation of power for the propulsion of a motor vehicle, an airplane, or a motorboat. The term does not include those blends that occur in the process of refining by the original refiner of crude petroleum or by the blending of products known as lubricating oil and greases. The term does not apply to fuel additives which have been subject to sales or use tax imposed by chapters 10-45 and 10-46, or to dye . The term includes the blending of one product that contains any amount of ethyl alcohol with any other product that contains any amount of ethyl alcohol, if the product obtained by the blending is capable of use in the generation of power for the propulsion of a motor vehicle, an airplane, or a motorboat ;


     Section 4. That subdivision (10) of § 10-47B-3 be amended to read as follows:

             (10)      "Ethanol blend," a blended motor fuel, commonly referred to as gasohol, containing a minimum of ten percent by volume of ethyl alcohol of at least ninety-nine percent purity derived from cereal grain which is commonly blended exclusively with a product commonly or commercially known or sold as gasoline with gasoline, E85 blend, M85 blend, ethyl alcohol, or any other ethanol blend . The blending of casinghead or natural gasoline is not permitted in an ethanol blend fuel product in quantities larger than required to denature the ethyl alcohol;

     Section 5. That § 10-47B-8 be amended to read as follows:

     10-47B-8.   A fuel excise tax is imposed on all ethyl alcohol and other substances blended with motor fuel or undyed special fuel unless the ethyl alcohol or other substance has previously been taxed by the provisions of this chapter , and on the motor fuel that results from the blending of one product that contains any amount of ethyl alcohol that has previously been taxed by the provisions of this chapter with any other product that contains any amount of ethyl alcohol that has previously been taxed by the provisions of this chapter . The tax imposed shall be at the rate indicated in § 10- 47B-4 of the dominant motor fuel or undyed special fuel with which the substance is blended unless the substance is ethyl or methyl alcohol blended by a licensed blender to create an ethanol, E85, or M85 blend in which case it shall be at the ethanol, E85, or M85 blend rate as indicated in § 10-47B- 4. The rate of tax on the motor fuel that results from the blending of one product that contains any amount of ethyl alcohol that has previously been taxed by the provisions of this chapter with any other product that contains any amount of ethyl alcohol that has previously been taxed by the provisions of this chapter may not exceed the rate set forth in subdivision 10-47B-4(3).

     Section 6. That § 10-47B-113 be amended to read as follows:

     10-47B-113.   The blender report required pursuant to § 10-47B-111 shall contain the following information, if deemed necessary by the secretary:

             (1)      The number of gallons of gasoline blended with ethyl alcohol to produce ethanol blend

or E85;

             (2)      The number of gallons of ethyl alcohol blended with gasoline to produce ethanol blend or E85;

             (3)      The number of gallons of unblended denatured ethyl alcohol sold, including the tax exempt sales made to licensed blenders, licensed suppliers for removal from a terminal in this state at the rack as a ten percent ethanol blend, and to a licensed exporter for export to a state for which the exporter is specifically licensed to export;

             (4)      The number of gallons of gasoline blended with methyl alcohol to produce M85;

             (5)      The number of gallons of methyl alcohol blended with gasoline to produce M85;

             (6)      The number of gallons of any other substances blended with motor fuel or special fuel; and

             (7)      A schedule of the names and addresses of all sales of blends in quantities of twenty-five gallons or more, except for sales of ten percent ethanol blends ; and

             (8)    The number of gallons of any motor fuel that contains any amount of ethyl alcohol and the number of gallons of any other motor fuel that contains any amount of ethyl alcohol that are blended together to produce an ethanol blend or E85 .

     Section 7. That § 10-47B-136 be amended to read as follows:

     10-47B-136.   A tax report credit for gasoline blended with ethyl or methyl alcohol to create an ethanol blend, E85 or M85 shall be allowed to the licensed blender who performs the blending activity. The tax report credit shall be granted on a per gallon basis in the amount that the rate for motor fuel exceeds the rate for ethanol blend E85 or M85. The credit shall be used to off-set any tax liability resulting from the blending of previously untaxed ethyl or methyl alcohol.

     This credit is extended only for gasoline which is blended with ethyl or methyl alcohol and no other fuel product. The further blending of additional fuel products with a motor fuel, special fuel, or ethanol blend as defined under this chapter shall cause this credit to be cancelled and the blended product shall be taxed at the rate of tax for motor fuel and special fuel.

     If a blender utilizes a blender pump to blend gasoline, ethanol blend, E85 blend, M85 blend, ethyl alcohol, or any other substance, and the product produced by the blending is sold as a motor fuel, the blender shall be granted a tax report credit for the taxes paid pursuant to the provisions of this chapter on the gasoline, ethanol blend, E85 blend, M85 blend, ethyl alcohol, or any other substance used in the blending process. "


Moved by:    Lintz
Second by:    McNenny
Action:    Prevailed by roll call vote. (5-4-0-0)

Voting Yes:    Duenwald, Koetzle, Turbak Berry, Lintz, McNenny

Voting No:    Hansen (Tom), Jerstad, Napoli, Peterson (Jim)

         THE CHAIR DEFERRED SB 110 UNTIL MONDAY, FEBRUARY 11, 2008

 MOTION:     AMEND TITLE OF SB 110

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     On page 1, line 1, of the printed bill, delete everything after "Act to" and insert "define certain terms for the purpose of administering the tax on motor fuels and to provide for the administration of the tax on certain ethanol blends dispensed by a blender pump.".

     On page 1, delete line 2.


Moved by:    Lintz
Second by:    Napoli
Action:    Prevailed by voice vote.

 MOTION:     ADJOURN

Moved by:    Lintz
Second by:    Napoli
Action:    Prevailed by voice vote.

Lois Henry

____________________________

Committee Secretary
Kenneth McNenny, Chair

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