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"BETC facing massive cutbacks"

The Oregon Business Energy Tax Credit program, accustomed to having hundreds of millions of dollars worth of tax credits to issue each year, may soon have to share just $10 million with a handful of other programs.

By Erik Siemers
Sustainable Business Oregon

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The Oregon Business Energy Tax Credit program, accustomed to having hundreds of millions of dollars worth of tax credits to issue each year, may soon have to share just $10 million with a handful of other programs.

A joint House-Senate committee on tax credits is mulling the fate of several tax credit programs — including the popular yet vilified BETC, as well as residential energy generation and conservation credits and tax breaks for film and TV productions — that are set expire half-way through the coming biennium.

Tax credits for renewable energy manufacturing projects aren’t set to expire until 2014.

Though lawmakers last year earmarked $150 million for the BETC in the first year of the biennium — from July 1, 2011 to June 30, 2012 — the state’s budget gap has made extending the programs through the final year of the biennium a challenge.

State Rep. Jules Bailey (D-Portland), a co-chair of the joint Tax Credit Committee which meets again today, said the release of the state’s revenue forecast earlier this month — which showed that general fund revenue through the end of the session was expected to drop by $16 million — gave lawmakers a clearer picture of what was available to the expiring tax credit programs.

The message that came down from the co-chairs of the Ways and Means committees, as well as the presiding officers in both chambers, was that “they needed us to budget all tax credits that were coming up for sunset to $10 million,” Bailey said.

Though those figures could still change, it appears likely that the BETC, at least for renewable power generation and conservation projects, could drop from $150 million in the first year of the biennium to just a few million dollars.

“I am typically not an alarmist, but we have a crisis on our hands for both renewable energy and conservation projects in Oregon,” Glenn Montgomery, executive director of the Oregon Solar Energy Industries Association, said in an e-mail distributed to industry officials earlier this week. “The potential impact on both businesses and residents is staggering. It’s unconscionable, in my mind, to effectively shut down public support for renewable energy production and conservation across the state at a time when our economy is in recovery and extremely fragile.”

Adding to the concerns, projects hoping to tap into the $150 million in BETCs in the coming year must be pre-certified, completed and receive their final certification within the year. Several industry advocates say it’s unlikely that most projects, particularly large renewable energy generation projects such wind farms, will be completed that quickly, meaning many of those tax credits are likely to go unclaimed.

Renewable energy leaders knew going into this year’s session that accruing levels of support for the BETC on par with previous years would be a tall task. But the figures coming out of Salem are proving to be even more disappointing than expected.

“It’s remarkable and sad to watch —for whatever reason — the state kind of dismantle the incentives that have brought all this money and jobs to the state,” said John Audley, deputy director of the Portland-based advocacy group Renewable Northwest Project.

With an air of resignation, Audley said his aim is, for the short term, to no longer focus on seeking to put more dollars into the programs.

“At the very least, we need to get policy that works again,” Audley said. “We can go back to the budget, either this session before its over or in future sessions, to put the money into those programs that they deserve so we can get back in the game.”

Bailey agreed, saying it’s important to focus on the structure of the programs.

“Get the structure right and hopefully Oregon’s economy is going to improve,” he said. “Getting that system right and showing it works, and works better, we can go back and make the case to the Legislature that it’s worthy of funding.”

For the moment, though, the BETC is being handed a dose of economic reality.

“Unfortunately, some of the stakeholders are having to come to the reality that folks on the public services and education side of the equation have been dealing with all session,” Bailey said. “There’s just an enormous hole and not enough money to provide for all the program’s we feel are important.”

 
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