Florida legislature hits trifecta with new NGV incentives

Compressed Natural Gas Escape. Photo by Puget Sound Energy

With a fell swoop, Florida is poised to vault into a leadership position among states offering incentives to encourage purchase of natural gas vehicles. On May 2, the Florida House of Representatives voted 116-2 to pass HB 579 – titled “Natural Gas Motor Fuel.” The state Senate had earlier voted unanimously 39-0 to pass the bill.

HB 579 eliminates, for a five-year period, the state’s existing 7 cents per GGE sales tax upon retail sales of CNG, LNG and propane when sold as a transportation fuel. After five years, natural gas fuels will be taxed at 21 cents per gallon as compared to 31 cents for diesel. The legislation also eliminates an existing state requirement that vehicles that run on natural gas purchase a decal at a cost of between $100 and $300 annually, depending upon vehicle weight. As for the trifecta, the legislation creates a new rebate program that will provide about $30 million in cash rebates over five years to encourage fleet owners to purchase NGVs or convert conventionally fueled vehicles to run on natural gas. Owners of three or more vehicles in commercial or government use will be eligible for rebates of up to $25,000 per vehicle.

According to Eric Criss, Chairman of the Florida Natural Gas Vehicle Coalition, the legislation will “harmonize the manner in which sales and excise taxes on diesel and natural gas are collected without raising taxes on natural gas fuel.” Criss says that the legislation is “more than we hoped for” when 15 companies banded together last August to form the FNGVC and released a report showing that providing incentives to encourage expanded use of natural gas as a motor fuel could create over 10,000 jobs, $300 million in new wages and $1 billion in economic output for Florida over two decades. Says Criss, “The cash incentives plus the excise and sales tax breaks, combined with favorable tax treatment in five years, make this the strongest NGV legislation in the nation.”

In February of this year, the FNGVC released a survey demonstrating that 72 percent of Floridians approved providing state support to convert commercial vehicles to run on natural gas as a strategy to reduce U.S. reliance on imported oil, create jobs and improve air quality.

At one point, prospects for the tax cut and rebates were threatened amid concern that revenues would be diverted from the state’s Transportation Trust Fund, needed for roadway capital improvement and maintenance needs. Compromise resulted in a decision to fund the rebates from the state’s General Fund instead of the Transportation Trust Fund.

If signed into law by Florida Governor Rick Scott, the measure will take effect January 1, 2014.

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