South Dakota bills would tweak ethanol, biodiesel tax rates

| 1/23/2008

Concern for revenues to help fund road and bridge work in South Dakota has led one state lawmaker to pursue legislation that would generate more money for the state. Another bill would further reduce state revenues for transportation.

The South Dakota Transportation Department has estimated the state faces a $27 million shortfall in revenue. To help offset a portion of the deficit, Senate Appropriations Committee chairman Jerry Apa, R-Lead, has offered a bill that would remove the 2-cent fuel tax exemption on gasoline containing ethanol offered in the state.

The fuel tax applied to regular gasoline and diesel now is 22 cents per gallon. The bill – SB110 – would bump up the per-gallon tax on ethanol from 20 cents to 22 cents.

A 2-cent increase in the ethanol tax rate could put another $4 million into the state’s highway fund, The Argus Leader reported.

While Apa is concerned about creating more revenues from fuel taxes, Gov. Mike Rounds has something else in mind. The governor said he wants to provide the same incentive for ethanol use to truckers and other consumers of diesel.

Rounds said he wants to reduce the fuel tax on biodiesel by 2 cents per gallon. He is hopeful offering the discounted tax rate would encourage production of the fuel made mostly from soybeans.

Apa’s bill is in the Senate Taxation Committee. The governor’s plan – SB148 – is in the Senate State Affairs Committee.

To view other legislative activities of interest for South Dakota in 2008, click here.

– By Keith Goble, state legislative editor