ARIZONA STATE SENATE
Phoenix, Arizona
diesel vehicles; fuels
program continuation
Continues
the program to grant monies from the Arizona clean air fund (ACAF) for the
conversion of heavy-duty diesel vehicles to operate on alternative fuel and
increases the amount of money available from the ACAF for these grants.
The
ACAF was established in 1996 to promote the use of alternative fuels by
providing grants for the purchase of alternative fuel vehicles and to assist in
the establishment of alternative fuel refueling facilities. The primary source of revenues for the ACAF
is an emissions test “in lieu” fee collected from vehicle owners in Area A
(primarily Maricopa County and small portions of Pinal and Yavapai counties)
who are not required to comply with emission testing requirements because they
drive newer vehicles. (The five newest
model years are exempt from emissions testing.) According to Joint Legislative Budget Committee staff, annual
revenues to the ACAF for the next two fiscal years are estimated at $12,350,000
per year. Of this amount, $11.7 million is estimated to be generated from the
“in lieu” emissions test fee.
During the second regular
session of the 44th Legislature, S.B. 1504 was enacted to, among
other things, expand tax credits and provide other incentives for alternative
fuel vehicles and the construction of alternative fuel refueling
facilities. The bill also mandated
specified uses of monies in the ACAF such as a $2.4 million appropriation from
the ACAF to the voluntary vehicle repair and retrofit program in FY 2000-2001
and the use of ACAF monies to buy down the vehicle emissions inspection fee
during calendar year 2001 (Laws 2000, Chapter 405).
Heightened
consumer interest in the ACAF grant program led to consumer participation in
the program that greatly outstripped ACAF funds available and created a
potential general fund liability estimated at anywhere between $400 million and
$600 million. On October 20, 2000,
legislation was enacted that imposed an immediate one-year moratorium on all
ACAF grants and income tax credits for alternative fuel vehicles and
alternative fuel refueling apparatus (Laws 2000, Sixth Special Session, Chapter
1). On December 14, 2000, Governor Hull signed S.B. 1004, passed during the
Seventh Special Session to limit the potential fiscal impact of the
program. This legislation reduced
taxpayer eligibility to receive tax credits for alternative fuel vehicles and refueling
apparatus and imposed additional requirements for eligibility. S.B. 1004 also mandated the continued use of
monies in the ACAF for replacement or conversion of heavy-duty diesel vehicles
to operate on alternative fuel. These
grants are for $30,000 per vehicle or 30 percent of the manufacturer’s base
retail price, whichever is more. These grants can only be made until October 1,
2001 and cannot exceed an aggregate total of $6.5 million. S.B. 1249 continues these types of grants
from the ACAF indefinitely and raises the annual cap from $6.5 million to $8.5
million.
There
is no anticipated general fund impact associated with S.B. 1249.
1. Continues indefinitely the program to grant monies from the ACAF for the conversion of heavy-duty diesel vehicles (over 19,500 gross vehicle weight rating) to run on alternative fuel.
2. Disallows the replacement of heavy-duty diesel vehicles with alternative fuel vehicles (e.g. replacing a diesel vehicle with a gasoline powered truck that has been converted to run on alternative fuel.).
3. Increases the annual cap on heavy-duty diesel grants from the ACAF from $6.5 million to $8.5 million.
4. Provides for a general effective date.
Prepared by Senate Staff
January 30, 2001