By Staff Reporter |
Property tax subsidies for wind and solar projects may be coming to an end in Arizona.
On Wednesday, an Arizona House committee approved HB 2918, legislation to hold renewable energy to the same taxation standards as other forms of energy production. The bill passed the Natural Resources, Energy and Water (NREW) Committee only with support from Republican lawmakers.
According to Joint Legislative Budget Committee estimates, renewable energy companies benefit from about $180 million annually in tax exemptions in the state.
The millions in exemptions come from two “stacked” subsidies: a reduction in the taxable original cost, which reduces a project’s starting valuation base below the actual amount invested through the value of certain federal incentives, and a valuation of 20 percent of depreciated cost, which sets the full cash value of renewable energy and storage equipment at 20 percent of the cost determined following establishment of the taxable original cost.
Republican lawmakers argue this benefit has gone on far enough, given how well-established the renewable energy industry has become. Legislative leaders say these sorts of benefits should be exclusive to emerging industries, like data centers.
Wednesday’s lack of support from Democratic lawmakers indicated the desire to shift resources away from renewable energy is rooted in a partisan desire to shrink the state’s foregone revenues.
NREW Committee chair Gail Griffin (R-LD19) said this legislation would put the merits of renewable energies to the test on the free market while keeping power reliable and affordable. Griffin said the “preferential treatment” of renewable energy lacked justification for further continuance.
“The American public has known from day one that these projects could not stand on their own feet without massive state and federal tax breaks,” said Griffin. “If renewable energy projects like wind and solar are truly the lowest-cost resource, then they should have no problem repealing the massive property tax break for new projects going forward.”
Last month, Gov. Katie Hobbs targeted the benefits given to data centers during her state of the state address.
House Majority Leader Michael Carbone (R-LD25) countered in a press release issued Wednesday that data centers have justification for their tax exemptions — renewable energies, not so much. Data center tax exemptions amount to about $38 million annually, less than one-fourth the amount received by renewable energy.
“The Governor said during her State of the State that, over a decade ago, ‘we made a strategic decision to grow data centers by creating a tax exemption for them,’ but then asked, ‘Should taxpayers continue subsidizing the data center industry?’” said Carbone. “I think the same question should be asked of large, utility-scale renewable energy projects like wind and solar. Years ago, this state gave renewable energy projects a massive tax break, substantially more than data centers, and now it’s appropriate to ask whether it’s fair to have Arizona taxpayers continue subsidizing the renewable energy industry.”
The legislation would impact large, out-of-state corporations. It would not apply to those facilities owned by or engaged in a power purchase agreement with the state’s public utilities — part of a grandfathering provision to ensure tax break eliminations don’t trigger a jump in customer rates.
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
