Senate committee reviews S.46 to clarify tax exemptions for forestry equipment

Michael O'Grady, legislative counsel, briefed the Senate Transportation Committee on S.46 on Feb. 14, explaining that the bill would clarify which vehicles and equipment used in forestry operations are exempt from the state's purchase-and-use tax and from sales tax.

O'Grady said the measure grew out of earlier efforts, beginning around 2016, to exempt certain forestry equipment from purchase-and-use and sales taxes and to resolve confusion at the Department of Motor Vehicles about which items qualify. "I'm gonna walk you through S.46," O'Grady said, noting past amendments and ongoing questions about whether wheeled equipment such as delimber trailers, tracked machines and flatbeds should be treated as motor vehicles for tax purposes.

The committee discussed three administration issues: (1) how to distinguish vehicles primarily used for forestry from those used as day-to-day personal or general-business vehicles; (2) whether a usage-certification threshold such as the 75% test used in agricultural sales-tax exemptions could be applied; and (3) practical DMV processes, including attestation or certificate forms and whether registration to a business entity would be required. O'Grady said sellers could use a certificate of tax exemption and that sellers and purchasers might be asked to attest to intended use. He also said he would consult with the Joint Fiscal Office (JFO) and DMV for details on administration and fiscal effects.

A representative of the Loggers Association told the committee they had submitted suggested edits from a recent meeting with the tax department and that, in their view, the changes would not make substantive changes to the bill as drafted. The committee chair and other members raised the policy question of whether a purchase-and-use exemption would amount to an industry subsidy and suggested alternative approaches such as a direct subsidy tied to industry metrics rather than a permanent tax exemption.

Committee members pressed for fiscal information. O'Grady said a fiscal note prepared in 2016 (or 2018) estimated an impact of about $100,000 but that an updated estimate would be needed if the committee moves forward. He said he would follow up with JFO and reach out to DMV to clarify how the agency administers similar exemptions and whether DMV could verify business registrations or attestations.

The committee asked members of the public and industry to email suggested language to counsel and requested JFO and DMV participation in future work sessions. No formal vote on S.46 was recorded during this hearing.

The committee agreed to continue the discussion after receiving input from JFO, DMV and the Loggers Association and after an updated fiscal estimate is prepared.