Department of Finance and Administration
Legislative Impact Statement
Bill: HB1234 Amendment Number: H2
Bill Subtitle: TO AMEND THE USED TIRE RECYCLING AND ACCOUNTABILITY ACT; TO
COMMERCIALIZE THE USED TIRE RECYCLING AND ACCOUNTABILITY PROGRAM; TO
CREATE THE ARKANSAS COMMERCE TIRE PROGRAM ACT; AND TO DECLARE AN
EMERGENCY.
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Basic Change :
Sponsors: Reps. L. Fite and S. Berry and Sen. Rice
House Amendment No. 2 --- HB1234-H2 (engrossed H3/27/23) addresses a drafting error in
HB1234-H1 by adding the May 2023 period of rim removal fee collections to the bill.
House Amendment No. 1 --- HB1234-H1 (engrossed H3/14/23) clarifies the operation of the Used
Tire Recycling and Accountability Program by:
Aligning the requirement for an out-of-state tire wholesaler to collect the tire environmental fee to
the economic nexus standards in the Arkansas Gross Receipts Tax Act;
Repealing the requirement for a regional solid waste management board to operate a waste tire
collection center; and
Specifying the transfer of funds from the Used Tire Recycling Fund to the Tire Environmental
Abatement Fund.
Original Bill --- HB1234 replaces the "Used Tire Recycling and Accountability Act" with the "Arkansas
Commerce Tire Program Act." The purpose of the program is to set and implement standards to be
followed in the hauling, collection, storage, and recycling or disposal of recyclable tires and waste tires.
Under current law, the program is managed by the Department of Energy and Environment - Division
of Environmental Quality (DEQ) which funds used tire programs, including regional solid waste
management boards and inter-district used tire programs. HB1234 states that it commercializes the
program.
HB1234 modifies the entity responsible for collecting the fees levied under the program. Under current
law, a tire retailer is responsible for collecting and remitting a "rim removal fee" when it sells a
replacement tire, which creates a used or waste tire by removing it from the tire rim. A tire retailer is
required to collect and remit a rim removal fee of $3.00 per new tire and $1.00 per used tire sold. The
fees are required to be remitted to the Department of Finance and Administration (DFA). HB1234
eliminates the rim removal fee.
HB1234 also eliminates the import fee of $1.00 per used tire that is imported into the state. The import
fee is required to be paid by the importer and is deposited as special revenue. HB1234 also eliminates
the $3.00 fee charged to a commercial generator for each new tire that is sold to an end user. Both
fees are currently deposited 93% into the Used Tire Recycling Fund and 7% into the DEQ Fee Trust
Fund.
HB1234 instead levies a "tire environmental fee" on a "tire wholesaler." A tire wholesaler is required to
collect a tire environmental fee of $1.00 per tire sold, to be remitted to DFA. A "tire wholesaler" is
defined as: a person who sells new tires or provides delivery of new tires to any one or more of the
following:
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3/27/2023 5:33 PM 1
Department of Finance and Administration
Legislative Impact Statement
Bill: HB1234 Amendment Number: H2
Bill Subtitle: TO AMEND THE USED TIRE RECYCLING AND ACCOUNTABILITY ACT; TO
COMMERCIALIZE THE USED TIRE RECYCLING AND ACCOUNTABILITY PROGRAM; TO
CREATE THE ARKANSAS COMMERCE TIRE PROGRAM ACT; AND TO DECLARE AN
EMERGENCY.
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A municipality;
A county;
A state agency;
A federal agency;
A school district;
A political subdivision of the state;
A person who in the ordinary course of business buys tires in bulk for use on commercial
vehicles;
A tire retailer;
A general merchandise store that also sells tires;
An internet tire company that sells tires in Arkansas; or
A tire importer.
A tire wholesaler is defined as a person who sells or delivers new tires, so the fee would only be
required on the sale of a new tire. Tire wholesalers are required to register with DFA, file monthy
returns, and remit the tire environmental fees monthly.
HB1234 provides that the fees will be deposited into a Tire Environmental Abatement Fund instead of
the Used Tire Recycling Fund. The rim removal fees under current law are used by DEQ to support
used tire recycling programs, abate and rehabilitate waste tire dumping sites, and to provide market
and economic incentives. HB1234 limits the use of the tire environmental fees to the abatement of
waste tire dumping sites and administrative costs. DEQ is required to report annually to the PEER
subcommittee on the use of the fees.
HB1234 provides the ability of DEQ or law enforcement officers to assess a $100 fine per tire on a
waste tire site.
HB1234 contains an emergency clause and would become effective on July 1, 2023.
Revenue Impact :
FY2024 - $5.2M reduction in fees collected.
[ Revenue Impact is based upon FY2022 reported new tires sold of 2,844,556 and $8,086,790 in waste
tire fee collections. Using the FY2022 number of new tires sold, HB1234 would levy a $1.00 tire
environmental fee for each new tire sold resulting in the revenue of $2,844,556, representing an
estimated revenue loss of $5,242,234.00. ]
Taxpayer Impact :
A tire retailer, commercial generator, or tire importer would no longer be required to collect the fees
levied under Used Tire Recycling and Accountability Act. A tire wholesaler would be required to collect
the $1.00 tire environmental fee for each new tire sold.
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3/27/2023 5:33 PM 2
Department of Finance and Administration
Legislative Impact Statement
Bill: HB1234 Amendment Number: H2
Bill Subtitle: TO AMEND THE USED TIRE RECYCLING AND ACCOUNTABILITY ACT; TO
COMMERCIALIZE THE USED TIRE RECYCLING AND ACCOUNTABILITY PROGRAM; TO
CREATE THE ARKANSAS COMMERCE TIRE PROGRAM ACT; AND TO DECLARE AN
EMERGENCY.
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Resources Required :
This bill will require programming and software changes for the reporting of the tire environmental fee
by tire wholesalers. Estimated costs for changes to Arkansas Integrated Revenue System (AIRS) are
$20,000.00.
Time Required :
Adequate time is provided for implementation.
Procedural Changes :
DFA staff would need to be trained on the new program.
Other Comments :
None.
Legal Analysis :
None.
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3/27/2023 5:33 PM 3
Statutes affected: Old version HB1234 V2 - 3-14-2023 09:19 AM: 8-6-718, 8-9-401, 8-9-412, 03-14-2023, 8-9-402, 8-9-407, 8-9-404, 8-9-403, 26-18-101, 8-9-405, 8-9-203, 14-21-101, 14-22-101, 14-25-101, 14-77-101, 8-9-408, 8-9-409, 8-9-404(c), 8-9-410, 8-9-411, 8-9-414(b), 8-9-414, 8-9-415, 8-1-101, 8-1-201, 8-4-101, 8-4-201, 8-6-204, 8-6-205, 8-6-207(a), 8-9-105, 8-9-408(c), 8-6-2001, 8-4-314(j), 8-6-206(b), 8-6-2004, 8-9-105(a), 8-9-202(4), 19-5-1148, 19-6-301, 8-9-404(a), 8-9-404(d), 19-5-203, 8-9-404(b)
Old version HB1234 V3 - 3-27-2023 10:40 AM: 8-6-718, 8-9-401, 8-9-412, 03-27-2023, 8-9-402, 8-9-407, 8-9-404, 8-9-403, 26-18-101, 8-9-405, 8-9-203, 14-21-101, 14-22-101, 14-25-101, 14-77-101, 8-9-408, 8-9-409, 8-9-404(c), 8-9-410, 8-9-411, 8-9-414(b), 8-9-414, 8-9-415, 8-1-101, 8-1-201, 8-4-101, 8-4-201, 8-6-204, 8-6-205, 8-6-207(a), 8-9-105, 8-9-408(c), 8-6-2001, 8-4-314(j), 8-6-206(b), 8-6-2004, 8-9-105(a), 8-9-202(4), 19-5-1148, 19-6-301, 8-9-404(a), 8-9-404(d), 19-5-203, 8-9-404(b)
HB 1234: 8-6-718, 8-9-401, 8-9-412, 03-27-2023, 8-9-402, 8-9-407, 8-9-404, 8-9-403, 26-18-101, 8-9-405, 8-9-203, 14-21-101, 14-22-101, 14-25-101, 14-77-101, 8-9-408, 8-9-409, 8-9-404(c), 8-9-410, 8-9-411, 8-9-414(b), 8-9-414, 8-9-415, 8-1-101, 8-1-201, 8-4-101, 8-4-201, 8-6-204, 8-6-205, 8-6-207(a), 8-9-105, 8-9-408(c), 8-6-2001, 8-4-314(j), 8-6-206(b), 8-6-2004, 8-9-105(a), 8-9-202(4), 19-5-1148, 19-6-301, 8-9-404(a), 8-9-404(d), 19-5-203, 8-9-404(b)