Oregon lawmakers hoped to save millions of taxpayer dollars by trimming state subsidies for wind energy farms, but Gov. Ted Kulongoski said Friday he will veto that effort.
In doing so, the governor signaled a low tolerance for any retreat on his vision for the state as a national center for alternative energy -- recession or no.
"A rollback in these tax credits would be detrimental to Oregon's continued success in creating green jobs and new green technology in the state," the governor's office wrote in a news release announcing his veto intent.
Kulongoski also said he will veto a bill that would have allowed older biomass energy plants at lumber mills to contribute to the state's goal of generating 25 percent of its power from renewable sources by 2025.
Sen. Ginny Burdick, D-Portland, who led the effort to rein in tax credits for wind farms, said she shares the governor's commitment to green energy but the tax breaks go too far and cost too much.
"At a time when families are sitting around the kitchen table telling their children they can't go to college because of tuition increases, is it really fair to take what amounts to a corporate subsidy and double it?" Burdick said.
The subsidies to wind farms are part of a program called the Business Energy Tax Credit. Anyone who builds a project that creates renewable energy qualifies for a tax credit worth half of the construction cost to a maximum of $20 million for some projects.
Over the past two years, the tax givebacks cost the state about $60 million. Over the next two years, the cost to the state is expected to rise to at least $144 million, according to the most recent estimates.
An investigation by The Oregonian this year showed that millions of dollars in tax credits were being handed to some risky startup companies, to projects with questionable environmental benefits and to projects that would have been built even without the state subsidy. Critics singled out wind energy farms as undeserving of such large tax breaks.
They don't employ very many people and they send most of their power to California, said Peggy Woolsey, treasurer of Tax Fairness Oregon, which studies the impact of state tax breaks. "The wind farms are oversubsidized," while schools, state police, prisons and programs that help the needy get short shrift, Woolsey said.
Supporters credit the subsidies for bringing hundreds of wind turbines to the eastern Oregon landscape and for enticing several big solar energy companies to Oregon.
Burdick successfully pushed for House Bill 2472, which cut the maximum tax credit for large wind farms from $11 million to $3.5 million. The reductions would save the state an estimated $10 million a year.
"If the governor decides to veto it, it will blow a $20 million hole in the budget," which covers two years, Burdick said. That could mean further cuts to education, which makes up more than half of state spending, she said.
Kulongoski spokeswoman Anna Richter Taylor said the governor would have supported a smaller reduction. Burdick's bill went too far and would take away Oregon's competitive edge for recruiting more wind turbines to the state, Taylor said.
She said the veto won't throw the budget out of whack or take more money out of schools and other state programs because the governor plans to replace the estimated $20 million cost with money from the state's ending balance.
"It's a minimal amount when you look at the return on investment," Taylor said.
The Legislature also passed a bill that requires the state to study the "financial reality" of wind energy to determine whether subsidies are needed. Kulongoski supports that effort, Taylor said. "We should get the facts first."
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