North Dakotans may be getting a small break on their heating bills, but they'll have to wait two years before it takes full effect.

The North Dakota Senate on Thursday voted 46-0 to approve a gradual elimination of the 2 percent state tax on heating fuels, which applies to natural gas, propane and heating oil. Electricity is not taxed.

The legislation drops the tax on natural gas, propane and heating oil to 1 percent on July 1, 2008, and abolishes it a year later. It keeps the current 5 percent sales tax on coal that is used to heat homes, but abolishes it in one swipe on July 1, 2009.

When it was first introduced, the legislation sought to eliminate heating fuels taxes on July 1. Sen. Rich Wardner, R-Dickinson, said Thursday the phase-out plan was adopted to lessen the impact on North Dakota's treasury if the tax is abolished.

"It was stepped in to reduce the fiscal effect," Wardner said during Senate discussion of the bill on Thursday.

An immediate tax cut would have meant $11.6 million less in collections for the state's general fund over two years, the state Tax Department estimated. Should the phase-in become law, the loss in tax collections would decline to $2.9 million during the next two years.

The bill has been one of the Legislature's more ballyhooed tax-cut proposals. Two of the state's public service commissioners, Tony Clark and Kevin Cramer, began pushing the idea last fall, saying the state's budget surplus - estimated at the time at more than $500 million - should have room for a tax exemption for heating fuels.

Clark and Cramer criticized the tax as regressive, pointing out that state collections from the tax rose as it got colder, and use of natural gas and other heating fuels increased.

The bill is HB1049.