Study says energy rebate has ‘positive net benefits,’ lawmakers unconvinced

Idaho would see “positive net benefits” economically if it extended its current tax rebate for development of alternative energy, according to a new Boise State University study that was presented to a legislative committee this afternoon. “Our research shows that the development of alternative energy in the state creates significant positive economic impacts due to increased job creation and expenditures by producers, and significant fiscal impacts by increasing tax revenues for state and local governments,” said the report prepared by the Center for Business and Economic Research at BSU. Passage of the tax rebate law, the study found, had “positive net overall benefits.”

The study also noted, “All of the states surrounding Idaho either have no sales and use tax or offer tax exemptions for purchases related to renewable energy development. In addition, all surrounding states offer additional tax incentives for alternative energy projects. Even with the current sales and use tax rebate program, Idaho ranks last in terms of fiscal incentives for alternative energy producers.”

Members of the House Energy & Environment Committee were unconvinced, however, and had lots of questions for BSU professors Geoffrey Black and Don Holley, the study’s authors. Rep. Erik Simpson, R-Idaho Falls, who introduced legislation Friday to place a two-year moratorium on new wind power plants, asked, “Given the explosion of wind energy development in the state, at what point do you stop the incentive? … If this is such a great state to do business in, why do we still need the 6 percent sales tax rebate?” Black replied, “All economic decisions are made at the margin.” Six percent of the $7 million construction cost for a wind power facility is “a chunk of change,” he said. “We didn’t look into the question of how vital is the 6 percent. We’re going to leave it to others to make that case.”

Rep. Eric Anderson, R-Priest Lake, said he’s worried that the incentive may cause wind power to be overbuilt in Idaho. He questioned economist John Church, who also made a presentation to the committee today, about whether the rebate really makes the difference in bringing the plants to the state. Church said, “If Idaho disadvantages itself compared to other states, it’s pretty reasonable to believe the investment would go somewhere else.” Idaho’s current alternative energy rebate expires June 30 unless lawmakers extend it; an extension bill, HB 250, sponsored by Rep. George Eskridge, R-Dover, and Sen. Curtis McKenzie, R-Nampa, is pending in the House; it would extend the rebate through 2014.