No free lunch … or tax credit
Oregon’s effort to become the greenest state in the land of the free relies heavily on tax credits for all sorts of newfangled energy projects. While some may look at the credits as a sort of free lunch, the truth is something else entirely.
Oregon grants business energy tax credits – which the recipient simply subtracts from its state income tax bill – for a variety of alternative energy projects, including wind and solar. The state spent about $68 million on the credits in the biennium just ended; it now expects to spend about $167 million on the same program during the current biennium. The dramatic increase could push the state budget into deficit by some $50 million, state officials say.
Lawmakers, led by Sen. Ginny Burdick, D-Portland, did attempt to rein the program in during the last legislative session, to their credit. Burdick believes that wind power, in particular, is close enough to being profitable to be able to withstand a reduction in the credits available for it, and she worked hard for legislation that would do just that. She was successful.
Unfortunately, Gov. Ted Kulongoski has a different view of the world. Determined to make Oregon a center for renewable energy and clearly not terribly worried about the cost of doing so, he vetoed the limiting bill. While we don’t know how much the state would have spent on business energy tax credits had the bill been approved, we do suspect it wouldn’t have been $167 million.
All of which leads to the real question this raises. Who will pay for $167 million in business tax credits?
The answer, clearly, is all of us. As Burdick noted recently, the money the state will spend that exceeds what lawmakers budgeted can come from only a few sources, in particular education, public safety and human services. Those three areas combined serve virtually every resident of Oregon on one level or another, meaning that to some extent we’ll all feel the pain brought about by the tax credit deficit.
We’d have paid anyway, to be sure, through the income tax checks we send to Salem each year, but now we’ll pay first through those taxes and second through reduced service from the state. That’s a mighty costly “free” lunch you might want to consider the next time you drive by a business sporting brand-new solar panels on its roof.
5 September 2009
Tags: Wind power, Wind energy
Some possibly related stories:
- State tax breaks for alternative energy to cost more than expected
- State lawmakers target energy tax credit costs; Benefit to large wind-power projects is likely to be reduced
- Oregon curbs controversial tax breaks for wind and solar firms
- Legislature votes to roll back Oregon tax subsidy for wind projects
- Tax dollars blowin’ in the wind
- Lawmakers pass restrictions on energy tax credits
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