Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

The stated purpose of this bill is to businesses a tax credit for composting certain types of garbage, landscape waste and food. As written, this bill would create a new tax credit of $2,000 for businesses that operate an onsite composting bin or that collect their compostable garbage, landscape waste and unused food separate from traditional garbage for transportation to a commercial composting facility. The credit may be applied against the Business and Occupation Tax, Severance Tax, Business Franchise Tax, and Corporation Net Income Tax. According to our interpretation, the $2,000 credit would be available to any business that composted no matter the volume of composted material. That is, the credit would be available to a business that composted a single leaf and would be available to a business that composted tons of material. Due to large potential benefit of the proposed credit compared to the potential cost by eligible businesses, it is estimated that passage of this bill would reduce General Revenue Fund collections by roughly $74 million each year. Assuming that all Business and Occupation Tax, Severance Tax, Business Franchise Tax, and Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify that a business complied with the credit requirements, additional administrative costs to the State Tax Department could be significant.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2011 Increase/Decrease (use"-")	2012 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	-74,000,000

Explanation of above estimates (including long-range effect):

As written, this bill would create a new tax credit of $2,000 for businesses that operate an onsite composting bin or that collect their compostable garbage, landscape waste and unused food separate from traditional garbage for transportation to a commercial composting facility. The credit may be applied against the Business and Occupation Tax, Severance Tax, Business Franchise Tax, and Corporation Net Income Tax. According to our interpretation, the $2,000 credit would be available to any business that composted no matter the volume of composted material. That is, the credit would be available to a business that composted a single leaf and would be available to a business that composted tons of material. Due to large potential benefit of the proposed credit compared to the potential cost by eligible businesses, it is estimated that passage of this bill would reduce General Revenue Fund collections by $74 million each year. Roughly 95,000 businesses would be eligible for the credit. Assuming that all Business and Occupation Tax, Severance Tax, Business Franchise Tax, and Corporation Net Income Tax returns claiming the new credit would be accepted as filed, additional administrative costs for the State Tax Department would be minimal. However, if the State Tax Department is required to verify that a business complied with the credit requirements, additional administrative costs to the State Tax Department could be significant.

Memorandum

The stated purpose of this bill is to businesses a tax credit for composting certain types of garbage, landscape waste and food. As written, this bill would make a $2,000 credit available to any business that composted no matter the volume of composted material. That is, the credit would be available to a business that composted a single leaf and would be available to a business that composted tons of material. As written, the credit, in many cases, would provide a large benefit for very little cost or effort of the claimant. The bill uses a number of terms without providing a definition.

Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@yahoo.com