ARIZONA STATE SENATE
Phoenix, Arizona
diesel vehicles; fuels
program continuation
Continues,
for five years, 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. Eliminates all other uses
of monies in the ACAF except for specified grants for constructing natural gas
or liquefied petroleum gas refueling systems at gas stations around the state
and to reduce the emissions test fees paid by motorists in Area A and Area
B. Repeals the ACAF and the in lieu
emissions test fee from and after June 30, 2006.
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 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 for five more years and raises the annual cap from $6.5 million
to $8.5 million. The bill also caps the
grant amount at $30,000 per vehicle and stipulates additional eligibility criteria.
Additionally,
the bill eliminates all other uses of monies in the ACAF except for grants for
natural gas or liquefied petroleum gas refueling systems at gas stations around
the state and the continuation of the
buydown of emissions inspection test fees paid by vehicle owners. The bill repeals the ACAF and the emissions
test in lieu fee on July 1, 2006.
There
is no anticipated general fund impact associated with S.B. 1249.
1. Continues for five years the program to grant monies from the ACAF for the conversion of heavy-duty diesel vehicles (over 20,000 declared gross weight) to run on alternative fuel.
2. Changes the amount of the ACAF grants for converting heavy-duty diesel vehicles to run on
alternative fuel
to be either the cost of conversion or $30,000, whichever is less.
3. Requires applicants for grants from the ACAF for the conversion of heavy duty diesel vehicles to meet all of the following:
· The vehicle must have a declared gross weight of 20,000 pounds.
· The vehicle must be subject to the motor carrier financial responsibility requirements for heavy-duty commercial vehicles (declared gross weight of 20,000 pounds).
· The vehicle cannot be a recreational vehicle.
· The vehicle must be registered in Arizona.
· The vehicle is not eligible for an income tax credit.
· The grant recipient must sign a statement indicating that it is the applicant's intent to keep the vehicle registered in Arizona for at least three years and operate it in Area A (Maricopa County) or Area B (Pima County) more than 50 percent of the time.
4. Establishes a civil penalty equal to the amount of a diesel conversion grant plus one thousand dollars for violations of the grant eligibility criteria.
5. 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.).
6. Clarifies that school buses and municipal buses are eligible for ACAF grants for conversion to operate on alternative fuel as long as all eligibility criteria are met, with the exception of the motor carrier financial responsibility requirements for commercial vehicles.
7. Increases the annual cap on heavy-duty diesel grants from the ACAF from $6.5 million to $8.5 million.
8. Provides for the annual transfer of $2 million from the ACAF to the emissions inspection fund to continue to buy down the emissions test fees paid by motorists for the Area A biennial test, the Area A annual test and the Area B annual test. The $2 million is to be used by ADEQ to buy down the cost of each of the three tests equally. If there are insufficient monies in the ACAF to pay for the emissions test buydown and the grants for converting heavy-duty vehicles to alternative fuels and constructing alternative fuel refueling stations, the transfer of the $2 million for the buydown is made first.
9. Eliminates all uses of monies in the ACAF beginning October 1, 2001 except for the heavy duty diesel conversion grants, grants for at least 16 natural gas of liquefied petroleum refueling systems at gas stations around the state and the buydown of emissions inspection fees paid by motorists in Area A and Area B.
10. Repeals the ACAF and the in lieu emissions test fee collected from the owners of the five newest model year vehicles on June 30, 2006.
11. Makes numerous technical and conforming changes.
Amendments Adopted by the NRAE Committee
1. Specifies additional eligibility criteria for recipients of grants from the ACAF for the conversion of heavy-duty diesel vehicles and prescribes a civil penalty for violations of the grant eligibility criteria.
2. Modifies the vehicle weight eligibility criteria to be based on declared gross weight rather than gross vehicle weight rating.
3. Eliminates all uses of monies in the ACAF beginning October 1, 2001 except for the heavy duty diesel conversion grants and grants for at least 16 natural gas refueling systems at gas stations around the state.
4. Repeals the ACAF on June 30, 2006.
5. Makes numerous technical and conforming changes.
6. Provides for a general effective date.
Amendments
Adopted by the APPROP Committee
Adopted the same amendment as the NRAE Committee except that the eligibility for grants from the ACAF for the construction of at least 16 refueling systems at gas stations around the state is expanded to include liquefied petroleum gas.
Amendments Adopted by Committee of the Whole
1. The Appropriations Committee amendment was adopted and the NRAE Committee amendment was withdrawn.
2. Repeals the in lieu emissions test fee collected from the owners of the five newest model years, starting July 1, 2006.
3. Changes the amount of the ACAF grants for converting heavy-duty diesel vehicles to run on alternative fuel to be either the cost of conversion or $30,000, whichever is less.
4. Provides for the annual transfer of $2 million from the ACAF to the emissions inspection fund to continue to buy down the emissions test fees paid by motorists for the Area A biennial test, the Area A annual test and the Area B annual test.
5. Clarifies that school buses and municipal buses are eligible for ACAF grants for conversion to operate on alternative fuel.
Senate Action
NRAE 2/8/01 DPA 7-1-0-0
APPROP 2/20/01 DPA 12-0-0-0
3rd Read 3/12/01 26-2-2-0
Prepared by Senate Staff
March 14, 2001