JLARC: landfill biogas exemption meets goals but reporting likely undercounts use

JLARC staff reviewed the sales-and-use tax exemption for biogas processing equipment used at landfills and concluded the preference meets the legislature's goal of increasing renewable natural gas production. Staff reported five landfills that process landfill biogas (about 28,000,000 standard cubic feet per day total), four producing renewable natural gas and one producing electricity.

Staff told the commission that tax-return deduction lines probably underreport total preference use, in part because businesses sometimes net exempt sales out of gross sales rather than use the specific deduction code; staff recommended the legislature require improved reporting—potentially via annual tax performance reports—so JLARC can track the number of landfills using the exemption and the amount of renewable natural gas produced. Commissioners asked for clarification about whether underreporting was due to taxpayer filing practices or other factors; staff said the underreporting concerns JLARC's ability to respond to the legislature's stated interest in these metrics.