State lawmakers target energy tax credit costs
Benefit to large wind-power projects is likely to be reduced
Published: September 03. 2009 4:00AM PST
SALEM — Lawmakers and state regulators plan to put new restrictions on a state tax credit that has helped Central Oregon’s renewable energy businesses.
Lawmakers for the Senate and House revenue committees met last week in Salem to discuss the state’s budget picture, including the business energy tax credit, or BETC, which encourages investment in alternative energy, recycling and energy conservation measures.
Lawmakers were told that the tax credit is estimated to cost the state $168 million over the next two years. That’s a jump of $24 million over the previous estimate, and about $100 million more than it cost the state in the last two-year budget cycle.
Earlier this year, lawmakers had tried to curb the tax credit, shaving about $20 million by limiting the benefit provided to large wind-power projects.
But that legislation, House Bill 2472, was vetoed by Gov. Ted Kulongoski.
Now, however, legislative observers think lawmakers will muster the two-thirds supermajority necessary to override Kulongoski’s veto when they return to Salem for an expected special session in February.
Also last week, Kulongoski directed the Oregon Department of Energy to tighten its rules on the program.
Mark Long, the department’s director, said companies will be asked to provide data on other tax breaks they are receiving as well as information that will allow the state to estimate profit margins. He said safeguards also will be put in place to ensure companies are obeying state laws, and also that projects deliver on promises made to the state.
“We’re thinking of this as a contract between our department and the person who wants the tax credit,” he said.
He said the new rules will help tax credit applicants by providing better timeliness, predictability and consistency.
“The rules right now leave a lot of open-ended questions” for businesses, he said.
The rules will be finalized by Oct. 1.
Meanwhile, the Legislature could take an even bigger bite out of the program.
HB 2472 was aimed largely at large wind-power projects that some lawmakers felt were abusing the state’s program.
The Senate Revenue Committee chairwoman, Sen. Ginny Burdick, D-Portland, said that not only is a veto override in the works, but lawmakers also will explore other tweaks to save the state money.
The program will be targeted for even more dramatic reductions if voters reject the personal and income tax hikes that are expected to be on a January ballot, according to Burdick.
“We don’t have very many places to go for cuts,” she said.
Sen. Chris Telfer, R-Bend, a member of Burdick’s committee, thinks major cuts or elimination of the BETC program would hurt Central Oregon in particular. That’s because she thinks the renewable energy industry has a lot of gains to make in the region.
Depending on what lawmakers do, she said, “I think it could have a major impact” on the region’s future development. “This is a prime area, there’s really some potential there.”
Mike Costanti, principal of Western Community Energy, a wind power company, said the tax credit was a big reason for his company’s decision to relocate from Montana to Bend last year. And any major changes could cause it to rethink that decision.
“It is the BETC that is making renewable energy in Oregon work,” he said. “If you take the BETC away, it would be very difficult for our company to be not only in Bend, but in Oregon.”
Nick Budnick can be reached at 503-566-2839 or at nbudnick@bendbulletin.com.
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