La. Bill That Would Exclude Solar, Wind from Tax Exemption Put on Hold

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BATON ROUGE (The Center Square) — Legislation to exclude wind and solar farms from a Louisiana tax exemption program drew pushback from lawmakers on the House Ways and Means Committee this week, forcing the bill’s author to voluntarily defer the measure for now.

Rep. Danny McCormick, R-Oil City, told committee members on Tuesday he sponsored House Concurrent Resolution 6 to exclude wind and solar power facilities from the Industrial Tax Exemption Program (ITEP) to ensure an “equal playing field” with oil and gas producers.

The program was created to offer property tax exemptions to manufacturing facilities in exchange for creating jobs. McCormick noted that companies extracting oil and natural gas do not qualify for ITEP, and argued that the same should apply to solar and wind farms.

“The oil and gas industry does not receive ITEP exemptions at the well sites, they do not qualify. Now downstream they do, and what this does is do away with ITEP exemptions for wind and solar on the farms, not the downstream side,” said McCormick, who owns M&M Oil Co.

“HCR 6 does not call for favor toward the fossil fuel industry, but rather the removal of a special favors that have been allotted to solar and wind production without regard to the ripple effects this will have on tax revenue, jobs, and our economy as a whole,” he said.

Lawmakers on the committee suggested the dynamic in the oil and gas industry, with the raw product piped to downstream locations for refining and energy production, is not an “apples to apples” comparison to wind and solar power, which is generated on site. They also noted that oil and gas are finite resources, as opposed to virtually unlimited wind and solar.

“You say you want to create an even playing field, but it seems like its two different industries,” said Speaker Pro Tempore Tanner Magee, R-Houma. “You have companies out there drilling wells, that is a raw product that’s having to be shipped in.”

“But wind and solar is a little different … there’s not a manufacturing process like oil and gas is,” he said.

Rep. Joseph Orgeron, R-Larose, who has sponsored legislation to expand wind energy leases, elaborated on the same issue.

“At a particular well site you don’t get an ITEP exclusion because you’re actually going in and retrieving and producing and severing the product. Ultimately that product goes through pipelines to a facility, refined into a product or natural gas to eventually get to a … gas-fired electrical generation station,” he said. “They do get ITEP in the area they produce it, they also get ITEPs perhaps where they refine it to a finer product.

“With solar and wind farms, they’re going straight from basically collecting the ‘raw materials’ — sunlight or wind — and basically producing electricity, a final product, on the spot,” Orgeron said. “So I think if the electrical production facilities get ITEP, then these electric production facilities should also get an ITEP, that’s the way I look at it.”

McCormick noted that ITEP exemptions for wind and solar would mean “schools won’t get property taxes off those facilities,” but Rep. Buddy Mincey, R-Denham Springs, countered that local officials have the ability to make that determination under an executive order signed by Gov. John Bel Edwards in 2016.

Magee and Rep. Matthew Willard, D-New Orleans, also pointed to a bill McCormick introduced to the committee on Tuesday just prior to HCR 6 that would cost the state an estimated $527 million to phase out the severance tax on oil by 2030.

“You can’t really talk about lack of funding for education … when you’re carrying a bill that’s going to take hundreds of millions of dollars away from the state,” Willard said.

“You don’t want ITEP on wind and solar because it doesn’t bring any money into the state because there’s no severance tax,” Magee said. “Meanwhile, you’re filing a bill on the same day that removes the severance tax on oil and gas. Those two statements in my mind are conflicting.”

Magee offered a motion to involuntarily defer HCR 6, which would require a vote to revive the measure.

McCormick ultimately decided to voluntarily defer the resolution instead.

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