On May 11, Indiana Gov. Mike Pence signed into law HB 1324. The act establishes a business tax credit equivalent to 50 percent of the incremental cost of purchasing or converting a conventionally fueled vehicle weighing 33,000 gross lbs. (class 8) that runs on CNG or LNG. Vehicle owners are eligible for a tax credit of up to $15,000 per vehicle with a maximum of up to a total of $150,000 per taxable year between 2014 and 2016.
The Act is designed to be revenue neutral. It will be paid for through imposition of an 11 cent per GGE tax surcharge on retail sales of natural gas when sold as a transportation fuel, replacing the prior 7 cents sales tax. A prior decal purchase requirement for vehicles fueled by natural gas will be eliminated. Public transit agencies are exempt from the 11 cent per GGE tax surcharge. Also included is an increase of 2,000 lbs. for vehicles fueled by natural gas allowed to travel on the state’s highways.
In any given year, no more than $3 million in total in tax credits can be claimed with a cap of $9 million over the three-year life of the tax credit authorized under HB 1324. A provision allows for pass through of the tax credits, allowing tax credits available to an eligible entity to be transferred to an entity with state business tax liability in exchange for an up-front cash payment.
The Act also implements an increase in the threshold at which state fleets are mandated to buy NGVs. Previously, if an alt-fuel vehicle’s price was 10 percent or less than the cost of a comparable conventionally fueled vehicle, state agencies were required to buy the alt-fuel vehicle. That threshold has been raised to 20 percent for NGVs, which expands the potential for more NGVs vehicles to make their way into government fleets.
In the state Senate, the bill passed by a vote of 575 yeas, 49 nays and 1 abstention. In the House, the bill passed by a vote of 639 yeas 99, and 1 abstention. With Gov. Mike Pence having signed the Act, it takes effect July 1, 2013.
In 2009, the Indiana Legislature authorized an alternative fueling station grant program with authority to provide up to $200,000 to individual entities that construct fueling infrastructure to dispense propane and CNG. However the program never received budget authorization.
According to Rep. Randy Frye, prime sponsor of the Act, with enactment of HB 1324, Indiana is turning the page to assume a leadership position among states supporting the NGV market. Says Frye, “XXXXX.” Kellie Walsh, Executive Director of the Greater Indiana Clean Cities Coalition, thinks that with the Act in place, there will be as many as 20 NGV fueling stations operating in Indiana by the end of 2013, up from about 12 today.