Commonwealth of kentucky legislative research commission general assembly local mandate fiscal impact estimate

2007 SPECIAL SESSION 2 2007 INTERIM

Program/

Office(s) Impacted:

Fiscal court;

Requirement:

X

Mandatory

Optional

Effect on

1. $100 million for alternative fuel facilities and gasification facilities that use coal as a primary feedstock;

2. $25 million for alternative fuel facilities and gasification facilities that use biomass resources as a primary feedstock; and,

3. $1 million for renewable energy facilities.

1. Up to 80% of the severance taxes paid on coal used as feedstock in an alternative fuel facility or gasification facility;

2. Up to 100% of the sales and use tax paid on the purchase of tangible personal property used to construct, retrofit, or upgrade an alternative fuel facility, a gasification facility, or a renewable energy facility;

3. Up to 100% of the Kentucky income tax and limited liability entity tax attributable to the eligible project; and,

4. Up to 4% wage assessments against employees whose jobs are created as a result of the eligible project.
Additional incentives include the following: In Section 17, a sales tax incentive for investment in machinery or equipment that increases energy efficiency by at least 15%, while maintaining or increasing the number of units produced. In Section 18, the coal tax credit in KRS 141.0405 is amended to expand to entities that qualify as alternative fuel facilities and gasification facilities that do not receive incentives under the Incentives for Energy Independence Act. In Section 20, the bill expands the biodiesel tax credit cap from $1.5 million to up to $10 million, and establishes an ethanol production credit and a cellulosic ethanol production credit of up to $5 million.
The bill creates a new section of KRS 56.770 to 56.784 to encourage the Finance and Administration Cabinet to employ energy saving strategies, and establishes the Governor's Office of Energy Policy. It attaches the Governor's Office of Energy Policy to the Office of the Governor. It requires the Finance and administration Cabinet to develop a strategy to replace at least 50% of the state owned passenger vehicles and light duty trucks with energy efficient vehicles.
HB 1 HCS creates the Kentucky Alternative Fuel and Renewable Energy Program and fund; establishes a student loan forgiveness program; and establishes an energy technology career track program. It establishes an engineering scholarship program and provides criteria for qualifications.
The bill appropriates the following in fiscal year 2007-2008 from the General Fund:

1. $5 million to the Governor's Office of Energy Policy;

2. $2 million to the University of Kentucky, Center for Applied Energy Research; and,

3. $300,000 to the Kentucky Development of Education for the Energy Technology Career Track Program.