Louisiana’s solar power industry is bringing in a big tea party gun to fight the Jindal administration’s assault on a tax break it says is vital to its survival.
The daughter of a Bogalusa preacher who now lives in Atlanta, Debbie Dooley was one of the 22 organizers of the first nationwide tea party protest in 2009.
Perhaps showing that conservative philosophies are not monolithic, Dooley rails against corporate domination at the expense of individuals when a frequent guest of conservative commentators like Sean Hannity. She’s been profiled in The New Yorker for rallying to the support of solar power, even as some right-wing powerhouses like the American Legislative Exchange Council push their members, some of whom are Louisiana legislators, to dismantle it.
The issue for Dooley is not so much the cutting-edge technology that produces renewable energy but government policies that favor big utilities and multinational fossil-fuel corporations at the expense of a competing industry.
“You should be consistent and not just favor one energy source,” Dooley said.
As the chairwoman of Conservatives for Energy Freedom, Dooley has led similar protests against rolling back solar power in Georgia and Florida.
And in a couple of weeks, she’s coming to Louisiana to help in what this state’s solar industry promises will be a full-court press to protect a tax credit it says is instrumental to installing about 15,000 systems that transform the sun’s rays into electricity in individual homes and small businesses, creating about 1,200 jobs along the way. All of that will end, the industry claims, if Gov. Bobby Jindal succeeds in ratcheting back the tax credit, which is due to expire in 2017, as a way to raise revenues.
“It’s good that he wants to cut the budget,” Dooley said. “But conservatives want to champion free market choice, and not let government pick the winners and losers” by retracting tax breaks for solar businesses but not for oil and gas or utility companies.
That’s all well and good, said State Revenue Secretary Tim Barfield, but the solar tax credit is one of the largest credits, and its cost to the state’s taxpayers is one of the fastest-growing. The solar credit cost $63.5 million in 2014, up from $39 million in 2013.
“What you see in the numbers is you see an exemption that’s really growing more than the economy,” Barfield said. “That’s a big part of the concern.”
Louisiana government is expected to take in $1.6 billion less in fiscal year 2016, which begins July 1.
Jindal proposes to balance the budget with cuts to services and by making money-saving moves in the way state government operates. He also has plans to raise revenues, including a controversial effort to turn a dozen refundable tax credits into nonrefundable ones. Basically, taxpayers can use the credit to pay off what they owe the state. But, after that, the state would keep any money left, rather than send the taxpayer a check.
In this way, Jindal expects to raise more than half a billion dollars in revenues.
About $57 million of that will come from the solar tax credits, said Meghan Parrish, spokeswoman for the Division of Administration. The agency bases its estimate on what the state paid above the tax liability in 2014.
But legislators would have to go along with the idea and change the wording of the laws that created the credits. A number of businesses that benefit from the credits, particularly the refundable part, have raised significant opposition.
The solar industry is one of the most politically active, Barfield said, adding, “It’s probably the single tax credit that I’ve had the most discussions about with industry, with consumers.”
Jindal’s proposal to change the credit from refundable to nonrefundable would pretty much bar its use by most middle- and lower-income homeowners, said Jeff Cantin, of New Orleans, a leader of the Gulf States Renewable Energy Industries Association, a nonprofit trade group representing solar and renewable energy companies and customers in Louisiana, Mississippi and Alabama.
Louisiana’s income tax rates are so low that middle- and low-income homeowners’ tax liabilities to the state will never be as much as the credit, he said. That means, because of the large upfront cost of about $25,000, only the wealthy will get the benefits.
Though installation charges have been dropping each year and continue to do so, most consumers still won’t be able to afford the upfront costs without the credit. A lot of companies, which have been planning for the credit to expire in 2017, may not survive for a couple more years if those business plans have to be tossed should Jindal’s proposal pass, Cantin said.
Installing solar panels became popular, particularly in New Orleans, after hurricanes Katrina and Rita knocked out electricity for weeks in some parts of the state. The combination of federal and state tax credits, which repaid about 80 percent of the installation costs, was attractive to homeowners as they rebuilt.
The Legislature and the industry have since agreed to phase out the credit completely by 2017.
The credit for homeowners who purchase solar systems is up to $12,500 until Dec. 31, 2016. If Jindal’s proposal passes, the homeowner would need to have a tax liability of at least $12,500 to realize the full amount of the credit.
The maximum credit allowed for systems leased by homeowners is $7,980 this year and drops to $4,500 beginning July 1.
A goodly number of middle- and lower-income homeowners lease their systems.
Metairie-based PosiGen is the nation’s fourth-largest residential solar panel company, with more than 6,000 customers, mostly in Louisiana. About 75 percent of PosiGen customers are lower-income homeowners.
Elizabeth Galante, PosiGen’s vice president of business development and governmental relations, said her company leases solar systems for an average of $780 a year. She said its customers save about $1,230 in utility costs annually.
The key point of solar panels is that they use the sun during the day to make electricity that runs a home’s systems. Any leftover energy is sold back to the utility company. At night, the solar homeowners buy electricity from the utility company. Their monthly electricity bill drops to a few dollars when excess electricity sold into the system is credited to their account.
Barfield said the Jindal administration isn’t wed to its plans on the solar industry tax credit. But given the state’s precarious finances, some of the credits are going to have to give.
“This is not do-or-die for the administration. If there are alternative proposals out there, we’re all ears. I want to hear their ideas of another way to achieve what we’re trying to do,” Barfield said.
Follow Mark Ballard on Twitter, @MarkBallardCNB.