BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE: February 20, 2001	Submitted by: TAXATION AND REVENUE DEPT.       
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER:  HB-651

SPONSOR:  Representative Silva

BILL SHORT TITLE:  Fuel Tax Increase for Highway Projects

CONFLICTS, DUPLICATES, COMPANIONS:  

DESCRIPTION:  This bill increases both the Gasoline Tax rate and Special Fuel Excise Tax rate by 2 cents per gallon effective July 1, 2002, and by an additional 3 cents per gallon effective July 1, 2003.  Distribution shares for most recipients of these fuel taxes are adjusted to be revenue neutral, with the increased revenue being directed to the State Road Fund along with an increasing share of the Motor Vehicle Excise Tax.  In fiscal year 2003 one-sixth of Motor Vehicle Excise Tax would be diverted from the State General Fund to the State Road Fund, one-third in fiscal year 2004, and one-half of the tax to the Road Fund in fiscal year 2005 and subsequent years.

The bonding authority for highway department road projects would be increased and a list of 20 road projects is proposed.  The current law 1 cent per gallon decrease in the Gasoline Tax scheduled for July 1, 2003 would be repealed.

EFFECTIVE DATE:  July 1, 2002

FISCAL ILLUSTRATION (Thousands of dollars)   Parenthesis ( ) indicate a revenue loss:

Approximate Impact on Revenues	Recurring or		
			Nonrecurring	Funds	
(FY 2002-2003)	(FY 2003-2004)	(FY 2004-2005)	     Impact     	         Affected         	
(19,300)	(41,067)	(65,500)	Recurring	State General Fund	
44,065	102,980 (1)	127,412 (1)	Recurring	State Road Fund	
0	0  	0	Recurring	Other Funds (2)	

(1)  The Taxation & Revenue and State Highway & Transportation departments have not prepared a consensus revenue estimate for gasoline or special fuel taxes beyond fiscal year 2003.  The numbers presented for fiscal years 2004 and 2005 are approximations to serve illustrative purposes only, and do not constitute a formal revenue estimate.  The fuel numbers for the additional 3 cent increases in fiscal 2004, as well as the second year of the 2 cent increase, are based solely on the fiscal year 2003 impact (ignoring the various 11 month vs. 12 month issues). The fiscal year 2003 impact includes 11 months of revenue at the increased tax rates. 

(2)  Distribution shares to other funds are adjusted in the bill to achieve revenue neutrality (within the limits of rounding the distribution percentages).  There would be no noticeable fiscal impact on local governments, the State Aviation Fund, the Motorboat Fuel Fund, the Municipal Arterial Program, or the Local Governments Road Fund.

ADMINISTRATIVE IMPACT:  A moderate negative administrative impact on both taxpayers and the Fuels Tax Unit of the Revenue Processing Division would result from the two tax rate changes over a two year period. The Department would have to administer, and taxpayers would have to report and pay, 4 separate fuel inventory taxes over a 2 year period.

Tax form changes, taxpayer notification, and revenue distribution changes for each of these tax rate changes would require a significant amount of time which would come at the expense of other projects and/or taxpayer service levels.  The changes proposed by the bill can be accomplished with existing personnel and budget resources, however, service levels could be expect to be somewhat degraded at certain periods due to the extra administrative burden.