Environmentalists and industrialists find themselves standing shoulder to shoulder as they try to maintain a tax credit for low-emission vehicles.
The tax break encourages buyers to support Louisiana natural gas while keeping the air cleaner, proponents argue. But as Louisiana faces a fiscal cliff, the government needs to focus on essentials like schools and healthcare, not writing checks to people who buy electric cars, a state senator said.
Companies, individuals and government agencies can currently claim a 36 percent tax credit when they buy a vehicle that runs on biofuel, ethanol, natural gas, electricity or other low-emission fuel. They can also claim the credit for converting a gasoline or diesel engine for a cleaner alternative.
The credit is scheduled to increase to 50 percent on June 30, 2018.
State Sen. Barrow Peacock (R-Bossier) last week proposed a bill that would eliminate the credit altogether, saying Louisiana can't afford to keep subsidizing Teslas and other low-emission cars.
"The market needs to determine whether it's the right way to go or not," he said.
State leaders are currently auditing Louisiana's various incentive programs trying to cut wasteful tax breaks and unfair credit, deduction and exclusion packages.
State Sen. JP Morrell was hopping mad.
Some of the state's tax exemptions may not be appropriate, but the alternative fuel credit helps support Louisiana's energy sector as it transitions to a greater emphasis on natural gas, said Randy Hayden, executive director of the Louisiana Propane Gas Association.
"This helps build a marketplace for alternative fuel vehicles," he said.
Other oil and gas lobbyists have stayed out of the debate thus far, as have some environmental groups, either because they haven't had a chance to review the proposal or because the program is, in the scheme of things, not a big-ticket item.
However, Louisiana Bucket Brigade Director Anne Rolfes came out strongly against Peacock's measure, saying it defies "common sense."
"This bill is bad economics, plain and simple. Clean fuels and renewable energy are the future," Rolfes wrote in a statement. "Working men and women in Louisiana will miss out on good jobs because of ridiculous bills like this, bills that kill our attempt to join the clean energy economy."
As a practical matter, the credit program remains small. The legislature has yet to publish the fiscal impact of repealing the measure, Peacock said. Hayden remarked that the number of alternative fuel vehicles in Louisiana is in the "hundreds and growing" but remains "minuscule" compared to gas and diesel-powered vehicles.
Some entities are interested in making the switch, such as the Capital Area Transit System and New Orleans waste collectors, Hayden said.
Baton Rouge's transit agency is performing some financial contortions to get through lean mo…
The biggest adopters have been corporations such as UPS, he said. But local companies have made the switch, too. Central lawn care company Green Seasons has converted 23 trucks and vans to natural gas power since December 2015, said owner Chris Casselberry.
"Without the incentive ... we wouldn't have done it," he said.
Casselberry's aware that the Baton Rouge-area hasn't always been compliant with federal air quality standards, and he wanted his company to help, but he also had to consider his bottom line. Each conversion cost about $14,000 to $19,000, and the credit made the switch worthwhile, he said.
The U.S. Environmental Protection Agency is ready to declare the Baton Rouge area in complia…
Hayden's goal is to convince more public agencies to switch to alternative fuel. If all the police cruisers, school buses and other government-owned vehicles made the change there would be a "noticeable" change in air quality.
But first, the state will need to determine whether the credit program should be continued. Peacock's proposal is Senate Bill 18 and will be heard in the 2017 regular session.