Green Fraud

Via Anthony Watt, from the Oregonian

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....

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.'"

Hmm, sounds eerily like what is going on with the health care bill in Congress.

Update: It turns out that all of the "green" companies so far have sold their tax credits for cash to companies like Wal-Mart and US Bank.  This is no enormous problem (though the optics are terrible for the state) but it is yet another reason why the Oregon budget gets busted by this program -- a startup solar company won't use tax credits for years as it will take some time to be profitable (if they ever are) but Wal-Mart can use them right now.

  • DrTorch

    Seems to be the business model of the day...at the local, state and federal level.

    Actually I'd be stunned but Ayn Rand was writing about this 50 years ago. With predictable consequences.

    Too bad so few people listened.

  • anon

    I agree the tax credits are BS on their face.

    But the fact that the start-ups can sell them to WalMart is a feature, not a bug. It's a mutually beneficial transaction -- cash today for the start-up, and a lower tax burden for WalMart.

    So assuming that you want to give "green" (or any other color) start-up a subsidy, this isn't a bad way to do it. Just realize what you're doing.

    That is, you are giving a current tax payer an opportunity to send his tax money to a 3rd party at a reduced rate (e.g., at 80 cents on the dollar) instead of to the governemnt at full freight.