Kansas hearing on tax credit for higher ethanol blends draws broad industry support

House Bill 2012 would create an income tax credit worth 5¢ per gallon for retail sales of higher ethanol blends (commonly called E15 when the blend is 15% ethanol) for tax years beginning in 2026 through 2031, with a $5,000,000 annual cap and a five‑year carryforward for unused credits.

The measure was the subject of a lengthy Committee on Taxation hearing that featured producers, fuel‑retailers and agricultural trade groups. Adam Sievers of the Revisor’s Office summarized the bill, saying, “The amount of the credit would equal 5¢ per gallon of higher ethanol ... sold by the retail dealer and dispersed through metered pumps,” and noting the credit would be nonrefundable and capped at $5,000,000 per tax year.

Why it matters: proponents told the committee the credit is intended as a short‑term market‑development tool to increase the number of stations offering higher ethanol blends, support in‑state ethanol production and reduce some toxic aromatics in gasoline. Opponents did not appear in person; several members asked technical and implementation questions about how the cap would be administered and how sales would be tracked.

Department of Revenue fiscal note and administration

Kathleen Smith of the Kansas Department of Revenue told the committee the department “do[es] not have data on retail sales of qualifying higher ethanol blend fuel to accurately estimate the fiscal effect of House Bill 2012.” She said if the credit were fully utilized the bill “would reduce state general fund revenues by $5,000,000 per tax year,” and that absent an application process the department would likely process credits as tax returns are filed — effectively first‑come, first‑served unless an application process is created.

Proponent testimony and key points

Representative Ken Rogers, chair of the House Agriculture and Natural Resources Committee and a former representative for the 110th District, said the bill would expand access to E15 and “boost agriculture because we're using more crops.” He asked the tax committee to pass the bill favorably.

David Vandergrind, CEO of ICM, emphasized environmental and octane benefits: “Almost all gas sold in Kansas ... is 10% ethanol today,” and increasing blends to 15% can reduce the need for aromatic octane‑boosting additives. Vandergrind told the committee higher blends can reduce toxic emissions in urban areas and be “good for the environment” and for in‑state production and refining.

Industry and agriculture groups supporting the bill included Renew Kansas Biofuels Association (represented by Trey Grama), Kansas Soybean Association (Caleb Little), Kansas Corn Growers (Josh Rowe) and POET Biofuels (Steve Seabrook). Among figures cited to the committee: - Josh Rowe (Kansas Corn Growers) said there are “approximately a 150 gas stations in the state that offer blends at E15 and above,” a figure he described as less than 10% of retailers. - Speakers estimated roughly 170 million gallons of ethanol are consumed in Kansas annually, and offered a rough figure of about 1 million gallons of E15 currently sold in‑state (estimates varied among witnesses).

Retailers and marketers

Philip Neer (identified in testimony as the founder of Jumpstart convenience stores in Wichita) described operational and market barriers facing retailers and said selling higher blends has been a long process: “We have 360 employees ... we're the tax collector. You know, we collect 44¢ a gallon on every gallon of tax that we pay to the state and the federal government.” Brian Posler, executive director of Fuel True Independent Energy and Convenience, said the credit would help offset up‑front costs for retailers (tank work, hoses, dispenser calibration) and increase options for consumers.

Questions from committee members

Committee members asked about administrative implementation (how the $5 million cap would be handled), consumer acceptance, vehicle compatibility, the water footprint of crops used for ethanol and whether existing retailers that already sell higher blends would be eligible. Department of Revenue said an application process would simplify administration; absent that the department would process claims as tax returns are filed and may need to work with the committee on an application system.

Status and next steps

The committee took no final vote on House Bill 2012 at the hearing; proponents were heard and the committee closed the proponent section before moving on. Several members indicated willingness to work with Department of Revenue staff on application and administration details if the bill advances.

Votes at a glance (committee procedural actions recorded during this meeting)

- RS 0429 (request introduced by Catherine Starr, Turo): request to introduce relating to rental and lease motor vehicles — committee approved the introduction (no objections recorded). - RS 0765 (requested by Gary Reeser/Kansas Soybean Association): committee approved a request to introduce a committee bill mirroring House Bill 2012 but targeted to biodiesel; request approved (no objections recorded). - RS 25RS0571 (requested by Steve Kearney): request to introduce language expanding Pawnee County retail sales tax authority for public safety uses — approved (no objections recorded). - RS 25RS0558 (requested by Steve Kearney): request to introduce a sales tax exemption for Kansas Legal Services (501(c)(3)) — approved (no objections recorded). - House Bill 2004 (summarized by the Revisor and moved by Representative Francis; seconded by Representative Howerton): committee moved the bill out favorably and placed it on the consent calendar by voice vote (“Aye… Motion carries”).

What the hearing did not resolve

- The committee did not adopt final language on administration (application process) or scoring rules for the $5 million cap. - No formal fiscal‑year appropriation or mechanism for interim allocations was adopted during the hearing; Department of Revenue emphasized it lacks retail sales data needed to estimate utilization.

Outlook

Proponents urged the committee to move House Bill 2012 forward as a market‑development tool to expand consumer access to higher ethanol blends, support in‑state production and reduce certain toxic components in gasoline. Committee members pressed for clearer administration and reporting mechanisms; the Department of Revenue said it would work with the committee on implementation details if the bill advances.

(Article based on Committee on Taxation hearing transcript excerpts including summaries by Adam Sievers, testimony from Kathleen Smith (Department of Revenue), and proponent testimony from Representative Ken Rogers, David Vandergrind (ICM), Trey Grama (Renew Kansas Biofuels Association), Caleb Little (Kansas Soybean Association), Josh Rowe (Kansas Corn Growers), Steve Seabrook (POET), Philip Neer (Jumpstart), Brian Posler (Fuel True).)