Tuesday, September 20, 2016

The Future of Solar Tax Credits In Utah: Part 2

Things are heating up in the debate regarding Utah's rooftop solar tax credit.  In The Future of Solar Tax Credits in Utah: Part 1, I described the budgetary problem facing Utah's education programs due to runaway claims from purchasers of rooftop solar panel systems.  Also, here is a recent radio conversation we had on the subject:

The problem is not that rooftop solar systems are bad, but rather, that the cost to install a system has fallen so much over the past few years that the market is adopting the technology at an accelerated pace.  While this is great news for consumers and industry alike, it is bad news for schools.  This rapid market expansion has exponentially increased the number of income tax credits being claimed...and in Utah, every dime of our income tax funds education.  So, more rooftop solar systems means less money to pay for teachers, tutors, and textbooks, and thus, the urgent need for us to review the tax credit in its current form and make the necessary revisions.

The course of events regarding this issue has taken a different path than I had anticipated. We scheduled three stakeholder meetings during interim to discuss the issue. In our first stakeholder meeting we defined the problem.  Later, we gathered again to discuss potential solutions.  However, that meeting devolved into a complete disaster.  The solar community came prepared to talk only about funding an administrative shortfall to facilitate processing EVEN MORE tax credits for their business.  They came completely unprepared to talk about changing the tax credit itself.  When I asked if anyone had any ideas or solutions, other than a suggestion from one of my brave constituents, the only sound that could be heard in the rest of the room was crickets.

Even more exasperating was the disingenuousness of a major solar company based in Utah (which we will call Bulldog Solar) who asked me to defer on my bill during the 2016 Session so we could discuss the bill together over interim with big and small companies in these meetings.  During the session they felt that a larger group of minds would provide a better result.  In good faith, I agreed and held the bill at their request.

So, you can imagine my dismay when during our second meeting Bulldog Solar's legislative affairs person, the very person who asked me to convene these meetings, says:

"We don't want to talk about the tax credit.  We want to talk about the administrative funding issue.  We will talk to Representative Peterson separately some other time about the tax credit."   
Unbelievable.  When this legislative affairs person defended their business by pointing out how much sales tax revenue they created for the state, I pointed out the stark irony that they had lobbied hard to get themselves exempted from sales tax last session.  They didn't find the humor in that.  The meeting ended on a sour note with the Governor's Office of Energy Development and myself completely flummoxed by the lack of stakeholder cooperation.

With the lines seemingly drawn in the sand, OED and I went about drafting a bill that would create some limits to how much solar tax credits could affect the state budget.  The bill would also create a new limited tax credit for battery storage.  I was called several times by stakeholders asking for a copy.  When the bill was drafted, I shared a copy with the solar companies so they could review it.  They then went radio silent...but you could still hear their war drums beating in the distance.

Our first hearing on the bill was scheduled for September 16th.  However, a series of unexpected events created uncertainty surrounding our presentation and also indicated we needed to include more substance in our bill.  We delayed the hearing for sometime in the future so we can address the freshly sprouted problems.

A key problem we discovered was that information held by the Office of Energy Development, which processes tax credit applications, and the Tax Commission, which accounts for those applications with tax returns, did not match up.  The OED counted nearly twice as many credits as the Tax Commisson reported.  It turns out that, due to confusion, taxpayers have been claiming their $2,000 credit under another similarly named tax credit which is meant for a different purpose.  The Tax Commission discovered this during its regular audits.  So, we intend to fix this confusion in the bill as well.

Another factor forcing us to postpone the hearing is that the Tax Commission will not have final numbers for 2015 tax credits until October.  We really need those figures to present a complete story to the committee.  

Meanwhile, Bulldog Solar has been lobbying committee members and painting a picture of devastation and ruin if the tax credit is changed in any way.  To a point, I can understand.  If my business received such lucrative preferential treatment from government as they are getting, I would be upset about change too.  However, dispassionate minds will understand that no such apocalypse is at hand and that such indulgences have consequences. In this case, those consequences are affecting our schools.  I look forward to presenting compelling evidence to our committee that solar tax credit reform is both timely and necessary.  

School kids mourning the impact of solar tax credits on Utah's education budget.  



  1. Another example of government involvement where it ought not be. New energy should develop on its own. When it is popular enough and economically feasible then it will be what it will be. This forced "close down the oil and gas industry" is totally unAmerican.

  2. I support your stance. These subsidies create industry winners and losers artificially. The beauty of the free market is to let everyone's individual dollar spent do the voting--not let government's heavy hand do it.

    Subsidies have been around ever since the revolutionary war (a subsidy was granted for salt makers due to the critical war-related shortage), so it's hard to say we can make them go away forever. But they have such a strong potential to create a nanny state that's it's tempting to say they don't have a place in our government whatsoever.


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