SENATOR Mumper

To amend sections 5733.98 and 5747.98 and to enact

1

sections 122.84, 122.841, 5733.46, and 5747.75 of

2

the Revised Code to create the Ethanol Production

3

Grant Program and to create a tax credit against

4

corporation franchise or income tax liability for

5

investments in ethanol plants.

6

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5733.98 and 5747.98 be amended and	7
sections 122.84, 122.841, 5733.46, and 5747.75 of the Revised Code	8
be enacted to read as follows:	9

Sec. 122.84. (A) As used in this section:

10

(1) "Eligible facility" means an ethanol production plant	11
located in this state.	12

(2) "Ethanol" has the same meaning as in section 5733.46 of	13
the Revised Code.	14

(3) "Qualifying period" means the period that begins on the	15
date an eligible facility begins the production of ethanol and	16
ends ten calendar years after that date.	17

(B) Beginning January 1, 2004, the ethanol production grant	18
program is hereby created to encourage ethanol production in this	19
state, promote economic development, and improve the economic	20
welfare of the people of this state. For purposes of this	21
program, the department of development shall make grants of money	22
from the ethanol production incentive fund created by section	23
122.841 of the Revised Code to eligible facilities that meet the	24
criteria in division (D) of this section. The amount of a grant	25
for a fiscal year shall be an amount equal to twenty cents per	26
gallon of ethanol produced at an eligible facility during the	27
previous calendar year, but shall not exceed three million	28
dollars.	29

(C) Beginning in 2004, not later than the first day of	30
February each year, the owner or operator of an eligible facility	31
may submit to the department of development an application for a	32
grant on a form furnished by the department. The application	33
shall contain such information as the director of development	34
prescribes under division (E) of this section. Not later than the	35
first day of April each year, the director shall notify each	36
applicant in writing whether it will be awarded a grant for the	37
ensuing fiscal year. If, for any fiscal year, the amount of grant	38
moneys for which applicants qualify exceeds the amount	39
appropriated from the ethanol production incentive fund for that	40
fiscal year, the director shall reduce each grant by the	41
proportion that the amount appropriated bears to the total amount	42
of grants for which applicants would otherwise qualify.	43

(D) The director of development shall award an applicant a	44
grant only after finding that all of the following criteria are	45
met:	46

(1) The applicant is an eligible facility.

47

(2) The eligible facility produced the amount of ethanol	48
reflected on its application for a grant.	49

(3) The eligible facility's net profits for the previous	50
calendar year did not exceed three million dollars.	51

(4) The eligible facility's qualifying period has not	52
expired.	53

If, after a grant has been awarded, the director of	54
development determines that an eligible facility fails to meet the	55
criteria established by this division or did not produce the	56
amount of ethanol reflected on the application, the director may	57
require that the facility refund all or a portion of the grant.	58

(E) In administering the program created under this section,	59
the director of development shall adopt rules in accordance with	60
Chapter 119. of the Revised Code necessary to implement this	61
section. The rules shall establish procedures and forms by which	62
applicants may apply for a grant, standards and procedures for	63
reviewing applications and awarding a grant, and procedures for	64
distributing the grant.	65

Sec. 122.841. There is hereby created in the state treasury	66
the ethanol production incentive fund for the purposes of the	67
ethanol production program established under section 122.84 of the	68
Revised Code. The fund shall consist of all appropriations,	69
grants, gifts, and contributions of money made to the department	70
of development from any source for the fund. All investment	71
earnings of the fund shall be credited to the fund. The	72
department shall administer the fund and use all money in it to	73
make grants under section 122.84 of the Revised Code and	74
administer the program.	75

Sec. 5733.46. (A) As used in this section:

76

(1) "Ethanol" means fermentation ethyl alcohol derived from	77
agricultural products, including potatoes, cereal, grains, cheese	78
whey, and sugar beets; forest products; or other renewable	79
resources, including residue and waste generated from the	80
production, processing, and marketing of agricultural products,	81
forest products, and other renewable resources that meet all of	82
the specifications in the American society for testing and	83
materials (ASTM) specification D 4806-88 and is denatured as	84
specified in Parts 20 and 21 of Title 27 of the Code of Federal	85
Regulations.	86

(2) "Ethanol plant" means a facility at which ethanol is	87
produced.	88

(3) "Money" means United States currency, or a check, draft,	89
or cashier's check for United States currency, payable on demand	90
and drawn on a bank.	91

(B) Beginning in tax year 2001 and ending in tax year 2011,	92
there is hereby allowed a refundable credit against the tax	93
imposed by section 5733.06 of the Revised Code for a taxpayer that	94
invests money in an ethanol plant. The amount of the credit	95
equals fifty per cent of the money the taxpayer invests in the	96
ethanol plant, but the credit amount shall not exceed fifty	97
thousand dollars. The credit shall be claimed in the tax year in	98
which the investment was made. For purposes of making tax	99
payments under this chapter, taxes equal to the amount of the	100
refundable credit shall be considered to be paid to this state on	101
the first day of the tax year.	102

(C) The taxpayer shall claim the credit in the order	103
required by section 5733.98 of the Revised Code. If the amount of	104
the credit under this section exceeds the amount of tax otherwise	105
due under section 5733.06 of the Revised Code after the deduction	106
of all other credits in that order, the taxpayer is entitled to a	107
refund of the excess.	108

(D) A taxpayer may transfer to another taxpayer all or a	109
portion of the credit to which the initial taxpayer is entitled	110
under this section by providing written notice of the transfer to	111
the tax commissioner, in such form as the commissioner prescribes,	112
at any time prior to the use of the credit. The taxpayer to which	113
the credit is transferred may apply it against the tax imposed by	114
section 5733.06 of the Revised Code and is entitled to any refund	115
amount, to the same extent as the initial taxpayer.	116

(E) The tax commissioner may require that the taxpayer	117
furnish information as is necessary to support the claim for the	118
credit under this section, and no credit shall be allowed unless	119
the information is provided.	120

Sec. 5733.98.  (A) To provide a uniform procedure for	122
calculating the amount of tax imposed by section 5733.06 of the	123
Revised Code that is due under this chapter, a taxpayer shall	124
claim any credits to which it is entitled in the following order,	125
except as otherwise provided in section 5733.058 of the Revised	126
Code:	127

(1) The credit for taxes paid by a qualifying pass-through	128
entity allowed under section 5733.0611 of the Revised Code;	129

(2) The credit for qualifying affiliated groups under	130
section 5733.068 of the Revised Code;	131

(3) The subsidiary corporation credit under section 5733.067	132
of the Revised Code;	133

(4) The savings and loan assessment credit under section	134
5733.063 of the Revised Code;	135

(5) The credit for recycling and litter prevention donations	136
under section 5733.064 of the Revised Code;	137

(6) The credit for employers that enter into agreements with	138
child day-care centers under section 5733.36 of the Revised Code;	139

(7) The credit for employers that reimburse employee child	140
day-care expenses under section 5733.38 of the Revised Code;	141

(8) The credit for maintaining railroad active grade	142
crossing warning devices under section 5733.43 of the Revised	143
Code;	144

(9) The credit for purchases of lights and reflectors under	145
section 5733.44 of the Revised Code;	146

(10) The credit for manufacturing investments under section	147
5733.061 of the Revised Code;	148

(11) The credit for purchases of new manufacturing machinery	149
and equipment under section 5733.31 or section 5733.311 of the	150
Revised Code;	151

(12) The second credit for purchases of new manufacturing	152
machinery and equipment under section 5733.33 of the Revised Code;	153

(13) The job training credit under section 5733.42 of the	154
Revised Code;	155

(14) The credit for qualified research expenses under	156
section 5733.351 of the Revised Code;	157

(15) The enterprise zone credit under section 5709.66 of the	158
Revised Code;	159

(16) The credit for the eligible costs associated with a	160
voluntary action under section 5733.34 of the Revised Code;	161

(17) The credit for employers that establish on-site child	162
day-care under section 5733.37 of the Revised Code;	163

(18) The credit for purchases of qualifying grape production	164
property under section 5733.32 of the Revised Code;	165

(19) The export sales credit under section 5733.069 of the	166
Revised Code;	167

(20) The credit for research and development and technology	168
transfer investors under section 5733.35 of the Revised Code;	169

(21) The enterprise zone credits under section 5709.65 of	170
the Revised Code;	171

(22) The credit for using Ohio coal under section 5733.39 of	172
the Revised Code;	173

(23) The refundable jobs creation credit under section	174
5733.0610 of the Revised Code;	175

(24) The refundable ethanol plant investment credit under	176
section 5733.46 of the Revised Code.	177

(B) For any credit except the refundable jobs creation	178
credit and the refundable ethanol investment credit, the amount of	179
the credit for a tax year shall not exceed the tax due after	180
allowing for any other credit that precedes it in the order	181
required under this section. Any excess amount of a particular	182
credit may be carried forward if authorized under the section	183
creating that credit.	184

Sec. 5747.75. (A) As used in this section:

185

(1) "Ethanol" means fermentation ethyl alcohol derived from	186
agricultural products, including potatoes, cereal, grains, cheese	187
whey, and sugar beets; forest products; or other renewable	188
resources, including residue and waste generated from the	189
production, processing, and marketing of agricultural products,	190
forest products, and other renewable resources that meet all of	191
the specifications in the American society for testing and	192
materials (ASTM) specification D 4806-88 and is denatured as	193
specified in Parts 20 and 21 of Title 27 of the Code of Federal	194
Regulations.	195

(2) "Ethanol plant" means a facility at which ethanol is	196
produced.	197

(3) "Money" means United States currency, or a check, draft,	198
or cashier's check for United States currency, payable on demand	199
and drawn on a bank.	200

(B) Beginning in taxable year 2001 and ending in taxable	201
year 2011, there is hereby allowed a refundable credit against the	202
tax imposed by section 5747.02 of the Revised Code for a taxpayer	203
that invests money in an ethanol plant. The amount of the credit	204
equals fifty per cent of the money the taxpayer invests in the	205
ethanol plant, but the credit amount shall not exceed fifty	206
thousand dollars. The credit shall be claimed in the taxable year	207
in which the investment was made. For purposes of making tax	208
payments under this chapter, taxes equal to the amount of the	209
refundable credit shall be considered to be paid to this state on	210
the first day of the taxable year.	211

(C) The taxpayer shall claim the credit in the order	212
required by section 5747.98 of the Revised Code. If the amount of	213
the credit under this section exceeds the amount of tax otherwise	214
due under section 5747.02 of the Revised Code after the deduction	215
of all other credits in that order, the taxpayer is entitled to a	216
refund of the excess.	217

(D) If the taxpayer is a direct or indirect investor in a	218
pass-through entity that has made an investment under this	219
section, the taxpayer may claim its proportionate or distributive	220
share of the credit allowed under this section.	221

(E) A taxpayer may transfer to another taxpayer all or a	222
portion of the credit to which the initial taxpayer is entitled	223
under this section by providing written notice of the transfer to	224
the tax commissioner, in such form as the commissioner prescribes,	225
at any time prior to the use of the credit. The taxpayer to which	226
the credit is transferred may apply it against the tax imposed by	227
section 5747.02 of the Revised Code and is entitled to any refund	228
amount, to the same extent as the initial taxpayer.	229

(F) The tax commissioner may require that the taxpayer	230
furnish information as is necessary to support the claim for the	231
credit under this section, and no credit shall be allowed unless	232
the information is provided.	233

Sec. 5747.98.  (A) To provide a uniform procedure for	234
calculating the amount of tax due under section 5747.02 of the	235
Revised Code, a taxpayer shall claim any credits to which the	236
taxpayer is entitled in the following order:	237

(1) The retirement income credit under division (B) of	238
section 5747.055 of the Revised Code;	239

(2) The senior citizen credit under division (C) of section	240
5747.05 of the Revised Code;	241

(3) The lump sum distribution credit under division (D) of	242
section 5747.05 of the Revised Code;	243

(4) The dependent care credit under section 5747.054 of the	244
Revised Code;	245

(5) The lump sum retirement income credit under division (C)	246
of section 5747.055 of the Revised Code;	247

(6) The lump sum retirement income credit under division (D)	248
of section 5747.055 of the Revised Code;	249

(7) The lump sum retirement income credit under division (E)	250
of section 5747.055 of the Revised Code;	251

(8) The credit for displaced workers who pay for job	252
training under section 5747.27 of the Revised Code;	253

(9) The campaign contribution credit under section 5747.29	254
of the Revised Code;	255

(10) The twenty-dollar personal exemption credit under	256
section 5747.022 of the Revised Code;	257

(11) The joint filing credit under division (G) of section	258
5747.05 of the Revised Code;	259

(12) The nonresident credit under division (A) of section	260
5747.05 of the Revised Code;	261

(13) The credit for a resident's out-of-state income under	262
division (B) of section 5747.05 of the Revised Code;	263

(14) The credit for employers that enter into agreements	264
with child day-care centers under section 5747.34 of the Revised	265
Code;	266

(15) The credit for employers that reimburse employee child	267
day-care expenses under section 5747.36 of the Revised Code;	268

(16) The credit for adoption of a minor child under section	269
5747.37 of the Revised Code;	270

(17) The credit for purchases of lights and reflectors under	271
section 5747.38 of the Revised Code;	272

(18) The credit for manufacturing investments under section	273
5747.051 of the Revised Code;	274

(19) The credit for purchases of new manufacturing machinery	275
and equipment under section 5747.26 or section 5747.261 of the	276
Revised Code;	277

(20) The second credit for purchases of new manufacturing	278
machinery and equipment and the credit for using Ohio coal under	279
section 5747.31 of the Revised Code;	280

(21) The job training credit under section 5747.39 of the	281
Revised Code;	282

(22) The enterprise zone credit under section 5709.66 of the	283
Revised Code;	284

(23) The credit for the eligible costs associated with a	285
voluntary action under section 5747.32 of the Revised Code;	286

(24) The credit for employers that establish on-site child	287
day-care centers under section 5747.35 of the Revised Code;	288

(25) The credit for purchases of qualifying grape production	289
property under section 5747.28 of the Revised Code;	290

(26) The export sales credit under section 5747.057 of the	291
Revised Code;	292

(27) The credit for research and development and technology	293
transfer investors under section 5747.33 of the Revised Code;	294

(28) The enterprise zone credits under section 5709.65 of	295
the Revised Code;	296

(29) The refundable jobs creation credit under section	297
5747.058 of the Revised Code;	298

(30) The refundable credit for taxes paid by a qualifying	299
entity granted under section 5747.059 of the Revised Code;	300

(31) The refundable credits for taxes paid by a qualifying	301
pass-through entity granted under division (J) of section 5747.08	302
of the Revised Code;	303

(32) The refundable ethanol plant investment credit under	304
section 5747.75 of the Revised Code.	305

(B) For any credit, except the refundable credits enumerated	306
in divisions (A)(29), (30), and (31), and (32) of this section and	307
the credit granted under division (I) of section 5747.08 of the	308
Revised Code, the amount of the credit for a taxable year shall	309
not exceed the tax due after allowing for any other credit that	310
precedes it in the order required under this section. Any excess	311
amount of a particular credit may be carried forward if authorized	312
under the section creating that credit. Nothing in this chapter	313
shall be construed to allow a taxpayer to claim, directly or	314
indirectly, a credit more than once for a taxable year.	315

Section 2. That existing sections 5733.98 and 5747.98 of the	316
Revised Code are hereby repealed.	317

Section 3. Not later than thirty days after the effective	318
date of this act, the Director of Budget and Management shall	319
transfer ten million dollars from the General Revenue Fund to the	320
Ethanol Production Incentive Fund.	321