With the school year about to start, now’s the perfect time to discuss a tax-credit blunder that will shortchange public schools and other services $20 million. The money has been used, instead, to subsidize a colossal wind farm, even as the state agency that was supposed to provide adequate oversight is telling taxpayers to move along. Nothing to see here.
Is this a great state or what?
The Shepherds Flat wind farm mess is the subject of extensive reporting by The Oregonian’s Ted Sickinger, whose work recently inspired Rep. Jason Conger, R-Bend, to request public hearings next month. Oregonians are unlikely to recover the lost tax revenue, but the hearings may produce some straight answers from some of the officials involved. They also may prevent similar mistakes from marring the state’s extensive backlog of applications under the since-tamed Business Energy Tax Credit (BETC) program.
The Shepherds Flat controversy involves a pair of problems, the first involving money and the second – and more vexing – involving a refusal to acknowledge the first.
At the heart of the money problem is the state’s decision to award the project three tax credits with a combined value of $30 million rather than the single tax credit worth $10 million to which it was entitled. Shepherds Flat began as one project that subsequently was broken up into three pieces in an attempt to maximize state subsidies, as Sickinger has reported. Even so, the three supposedly distinct projects retained enough characteristics of a single project to disqualify the slice-and-dice effort for tax credit purposes. For instance, the projects occupied adjacent pieces of land, used the same general manager to buy generation equipment from the same supplier and shared an electrical switching system. What’s more, they were financed under a single federal loan guarantee.
The state Energy Department approved the triple credit anyway, violating both state criteria and a common-sense principle former department director Lynn Frank has described as follows: “If it looks like a duck, walks like a duck and quacks like a duck, it is a duck.” Frank later likened the Shepherds Flat project to “one duck cut into three parts” and asked, “Why was taxpayer money used this way? Good question. It deserves a good answer.”
But no such answer has been forthcoming even though the Energy Department recently reviewed its decision with the assistance of the state Justice Department. Energy Department officials gave their blessing, once again, to the inappropriate tax-credit bonanza while refusing to provide substantive information about the legal underpinnings of the decision.
“You’ll have to take our word for it, that we actually work with our attorneys and staff diligently,” department director Lisa Schwartz told Sickinger. “I’m not waiving client-attorney privilege.”
Taking the department’s word that it works with attorneys and staff diligently isn’t too hard. But taking its word that it’s making good decisions is another matter entirely, and that’s ultimately what Schwartz is asking taxpayers to do.
This is where Conger and other lawmakers can provide a valuable service during hearings next month. If Oregonians aren’t going to get their money back, they at least deserve to know the legal underpinnings of the department’s insistence upon calling a duck a hippopotamus. Conger’s request for hearings, sent this month to House Revenue Committee Chair Phil Barnhart, is encouraging in this regard. Such hearings, Conger wrote, should “provide public disclosure, discussion and accountability,” to which end he requests the participation of witnesses who “could provide insight into the economic justification, legal framework and approval process for the credits.”
Conger and his colleagues shouldn’t accept “take our word for it” for an answer. The extra $20 million taxpayers spent on this project entitles them to some specifics.
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