A sales and use tax exemption for extended-range electric vehicles; a property tax exemption for tangible personal property used to recharge electric vehicles; the motor vehicle emission inspection and maintenance program, extended-range electric vehicle grants; an income and franchise tax credit for research conducted in this state by a corporation; a property and sales and use tax exemption for certain machinery and tangible personal property used to conduct research; granting rule-making authority; and making appropriations

This bill also creates a property tax exemption and a sales and use tax exemption for machinery and other tangible personal property used for qualified research by persons engaged primarily in manufacturing, silviculture, or biotechnology in this state.

Vehicle emission inspections and electric vehicle grant program Current law requires the Department of Transportation (DOT) to conduct a motor vehicle emission inspection and maintenance program (I/M program) in counties in which the air quality does not meet certain federal standards (nonattainment counties). Under the I/M program, most motor vehicles that are subject to emission limitations established by the Department of Natural Resources (DNR) must pass periodic emission inspections and may not be registered by DOT unless they have passed these inspections. Most nonexempt motor vehicles must undergo an initial emission inspection in the fourth year after the vehicle's model year and additional emission inspections every two years thereafter. DOT may contract with third parties to perform vehicle emission inspections under the I/M program. The costs of administering the program, including contracting for emission inspections, are primarily paid by DOT from the transportation fund, although a small portion of the costs are paid by DNR from the general fund.

This bill terminates the I/M program on July 1, 2011, and prohibits DOT from entering into any new contract, or renewing or extending any existing contract, for the operation of the I/M program before that date. The bill also creates appropriations to transfer money from the transportation fund to the general fund and to fund, from the general fund, an extended-range electric vehicle grant program. The bill requires the Department of Commerce (Commerce), after July 1, 2011, to award grants to promote the extended-range electric vehicle industry, and research, production, and use of extended-range electric vehicles, in the nonattainment counties. Commerce must promulgate rules to implement and administer the extended-range electric vehicle grant program.

Super research and development credit Under current law, for taxable years beginning on or after January 1, 2011, a corporation may also claim a "super research and development" income and franchise tax credit equal to the amount of its qualified research expenses in the taxable year for research conducted in this state that exceeds the amount equal to the average amount of the corporation's qualified research expenses in the previous three taxable years multiplied by 1.25. If the credit claimed by a corporation exceeds the corporation's tax liability, the state will not issue a refund, but the corporation may carry forward any remaining credit to 15 subsequent taxable years. Under the bill, a corporation may claim the super research and development credit for taxable years beginning on or after July 1, 2010.

This bill will be referred to the Joint Survey Committee on Tax Exemptions for a detailed analysis, which will be printed as an appendix to this bill.