Energy Tax Credits Generate Charge
September 03, 2009
Author: CFM Staff
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Governor Kulongoski's veto of legislation that trimmed state tax incentives for large wind energy generation projects didn't sit well with some members of the House and Senate Revenue committees. Nor has information that has developed since the veto.
Last week, the Legislative Revenue Office revised upward its estimates of the tax expenditure this biennium caused by Business Energy Tax Credits from around $140 million to more than $160 million. The projection in the following biennium shot up to $240 million.
LRO revised its estimates upward based on the number of pending applications for qualifying wind projects now before the Department of Energy.
The higher estimates will be fuel for BETC critics who say the tax incentive program is out of control. Some, including Senate Finance Chair Ginny Burdick, D-Portland, argue that the wind industry has matured and no longer needs as much of a tax incentive.
This week, three wind farms, all located in Eastern Oregon, received a total of $140 million in federal grants – roughly 25 percent of the overall amount awarded to a dozen wind projects nationwide. Treasury Secretary Tim Geithner was quoted as saying the grants were in lieu of federal investment and production tax credits and were aimed at accelerating project construction.
While that may be good news for the wind developers and portions of Eastern Oregon, the grants may heat up the battle more over what to do with BETC.
The legislature passed, and Kulongoski signed, a bill requiring an in-depth examination of BETC, including how it works and what is the most cost-effective, yet competitive incentive level.
Findings from that study, which was the idea of Senator Frank Morse, R-Albany, could be pressed into service as early as the February 2010 supplemental session, when lawmakers could take a potential veto override or look at alternative legislation.
Also as a result of legislation approved in the 2009 session, BETC expires in 2012. One suggestion has been to make some changes, extend the tax credit for at least two more years, then take the time to give a comprehensive review.
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