Oregon Business Energy Tax Credit: Less Credit and Tightened Rules?

Oregon has ample renewable energy

Oregon government is caught in a quandary over its Business Energy Tax Credit (BETC, also known as “Betsey).  On  one hand is the consideration that offering generous credits for renewable energy development will encourage more of the same.  On the other hand, taxes raise money for the state and its programs.

Cut down on revenue, and then what?

Here in Central Oregon, where I live, there are a number of companies, nonprofits and government agencies that rely on the BETC.  From PV Powered to SunSolar, people are relying on the tax credit to help spur new development.  The program helps grow renewable energy businesses, open the doors for more solar installations that might otherwise be too expensive and generally encourage clean energy investment.

Yet, some have accused the government of being too generous.

On the table are new rules from the Oregon Department of Energy to close loopholes in the program.  More changes could be on the way for the Legislature’s special session in February 2010.

Renewable energy abounds in Oregon

What does this mean for Oregon corporations and residents?  The new rules are aimed at aspects of BETC that had been abused by some… in particular, the ability to re-sell tax credits to other companies.

When investors purchase discounted tax credits, some legislators see that as turning profits at the expense of the state.  But that is one of the foundations of the program.  Nonprofits, local governments and start-ups may not be able to use the tax credits themselves, but they could re-sell them to companies that can.

Some call this a “pass-through profit.”  Critics say that some companies are being enriched who “don’t need to be enriched.”  The new rules would cut out the middleman… in other words… the investor who may purchase tax credits at a discount.

So, who will be hurt?  Taxpayers or businesses?

Rob O’Neill, a partner at the Portland office of the accounting firm, Moss Adams, observes that critics of the tax credit do not consider the fact that some investors only use the tax break over a limited number of years.  He notes that BETC is one of the best tools that Oregon has to recruit new solar investment to the state.

Quite literally, the state is walking a tightrope of wondering from where the next dollar will come:  existing taxpayers, or new business?

Green jobs in Oregon!

Consider this statistic:  $73 million of tax credits in 2007 led to 900 additional jobs that would not ave been created if the money had been spent on other state-funded programs.  Oh sure:  do the math and $73 million sounds like a lot for only 900 jobs.  But the money was in the state’s coffers.  And if it had been spent elsewhere, the jobs would not be in existence.

Of course, not everyone agrees with the accuracy of the statistics and studies.

Money may make the world go round, but could it stop global climate change progress in the name of taxpayer dollars?

We’d love to read your comments on the issue -whether you live in Oregon, do business here, or wonder how tax credit legislation could impact the area in which you live.