Paper: Oregonians Misled on Green Energy Tax

The Oregonian has the not-so-encouraging tale of how the people of Oregon were allegedly misled regarding the price tag of a new Business Energy Tax Credit. Though the program was designed to lure green jobs, it’s now inciting anger as income taxes may potentially be raised to aid the state budget. Perhaps the state could recover the loss by asking Nike founder Phil Knight to enhance the state budget — maybe instead of funding the University of Oregon’s notoriously garish football uniforms.

State officials deliberately underestimated the cost of Gov. Ted Kulongoski’s plan to lure green energy companies to Oregon with big taxpayer subsidies, resulting in a program that cost 40 times more than unsuspecting lawmakers were told, an investigation by The Oregonian shows.

Records also show that the program, a favorite of Kulongoski’s known as the Business Energy Tax Credit, has given millions of dollars to failed companies while voters are being asked to raise income taxes because the state budget doesn’t have enough to pay for schools and other programs.

The incentives are now under intense scrutiny at the Oregon Department of Energy, which is scrambling to curb their skyrocketing costs.

Energy officials were worried about the impact on the state budget in 2006, when Kulongoski and his staff proposed a dramatic boost in tax breaks to woo wind and solar companies to Oregon — upping the subsidies from a high of $3.5 million per project to as much as $20 million.

According to documents obtained under Oregon’s public records law, agency officials estimated in a Nov. 16, 2006, spreadsheet that expanding the tax credits would cost taxpayers an additional $13 million in 2007-09. But after a series of scratch-outs and scribbled notes, a new spreadsheet pared the cost to $1.8 million. And when energy officials handed their final estimate to the Legislature in February 2007, they pegged the added cost at just $1.2 million for the first two years and $4.1 million for 2009-11.

The higher estimates were never shown to lawmakers. Current and former energy staffers acknowledged a clear attempt to minimize the cost of the subsidies.

"I remember that discussion. Everyone was saying, yes, this is going to be a huge (budget) hit," recalled Charles Stephens, a former analyst for the Energy Department who left in 2006. "The governor’s office was saying, ‘No, we need a smaller number.’"

Spinning Windmills and Movie Reels for Michigan?

Give Michigan Gov. Jennifer Granholm credit for truthfulness. Her State of the State speech included this statement: "Any honest assessment of our state’s economy has got to recognize that things are likely to get worse before they get better."

As for some of the specifics in the address, Granholm appears to have adopted the "promise everything and see what sticks" approach. A few examples from this Detroit News summary:

  • Following the lead of several people currently in power in Washington, she is denouncing coal. A potential moratorium on new coal-fired plants and a "45 by 20" plan that calls for a 45% reduction in fossil fuels by 2020 sounds nice, but doesn’t pass the realism test.
  • As for no utility shutoffs, a one-year freeze on car insurance rates and no home foreclosures without 90-day notices. These are great for consumers to hear, but can businesses survive and thrive with those restrictions?
  • In education, "Promise Zones" to help provide college tuition for the needy and "Algebra for All" to better prepare teachers offer hope for improvement.
  • And, if the green energy industry doesn’t help the auto woes, there is state money proposed for an $86 million animation movie studio in Detroit, and a $54 million movie studio in Detroit. What?

Sure, Indiana might compete with our neighbors to the north in some business aspects. But in looking beyond state borders, a stronger Michigan would likely mean a stronger region to the benefit of all.

The economic hole is a deep one. Good luck! You’re going to need it.