By GOV. TED KULONGOSKI
The Sunday, Nov. 1, story by The Oregonian’s Harry Esteve, “State lowballed cost of green tax breaks,” implied that I or my staff directed former state energy director Mike Grainey to manipulate or falsify cost estimates for the Business Energy Tax Credit (BETC) when we expanded the program in 2007 to grow Oregon’s renewable energy jobs sector. That implication is highly misleading.
I did no such thing. I also did not ask my staff to direct Grainey or to work with staff at the Energy Department to reduce revenue impact statements. The suggestion is not a practice that I have ever endorsed or executed as governor of Oregon.
Two days later, the front page of The Oregonian also ran a story announcing 200 new, high-paying jobs with Sanyo, a solar energy company that opened a multimillion-dollar facility in Salem.
As I said at the ribbon-cutting ceremony, the growth in Oregon’s renewable energy sector was not by accident — it was by design and the result of public policies, such as the BETC and the Renewable Portfolio Standard among others, that encourage new companies to move here and thrive here. The Sanyo story is all about jobs — in Oregon during a nationwide recession — and replicates other BETC successes.
The numbers prove that the BETC program is one of the most effective economic development tools in our effort to create green jobs. Since we expanded the program in 2007, Oregon has ranked in the top 10 states in wind energy production; has become the leading solar manufacturer in North America, with SolarWorld, Sanyo, PV Powered, Solaicx and Peak Sun; and according to the Pew Charitable Trust, Oregon has the highest percentage of green jobs per capita of any state in the nation.
These companies not only employ thousands of Oregonians and contribute billions to our state’s economy, but also help advance the transition to cleaner, renewable energy sources.
That said, I have always believed that tax credits have a life span and require regular review to ensure the credits remain good public policy. The BETC program is no exception.
The expansion of the BETC program in 2007 proved a success and was used beyond anyone’s expectations. As a result, the debate about the program was one of many policy discussions during the 2009 legislative session. Throughout the session I remained an advocate for the program as one of many tools to grow our green economy and spur renewable energy development — but I was also clear that I was open to a reasonable level of modification.
Last session I supported House Revenue Committee Chair Phil Barnhart’s proposal to responsibly reduce the cap for the BETC from $10 million to $7.5 million. But I could not support the final version that emerged from the Senate, which reduced the cap even further to $3.5 million, because it would have put Oregon at a competitive disadvantage with our neighboring states at a time when we needed to be doing everything possible to create economic opportunities — not squander them.
In August, when I vetoed the Senate version of the bill, I restated my support of re-examining the incentive levels of the BETC. That is why I fully endorsed another bill that directed the Oregon Department of Energy, Public Utility Commission and Oregon Business Development Department to commission an economic analysis of renewable energy projects that qualify for the BETC so we can obtain the latest facts and make an informed decision about the program going forward. That study will be completed by next October in order to have the necessary information for the 2011 legislative session before the program sunsets in 2012.
When I vetoed the bill, I also directed the Department of Energy to tighten the rules implementing the BETC, including clarifying issues around awarding multiple BETCs, establishing clear performance criteria, such as job creation, as well as increasing state authority to revoke, approve or deny BETC applications. These rules, which were developed over the last three months, took effect this month and are a first step to better ensure that Oregon is getting a return on its investment.
A second step was taken last week to begin to address the pass-through option discount rate. There are also other ideas about making the program more selective that we should continue to debate during the February 2010 special session and the 2011 regular legislative session. With the new rules in effect, as well as an updated economic analysis of the program, we will have the information needed to make prudent decisions about how best to ensure that this program delivers new jobs, greater energy efficiency and clean, renewable energy.
The BETC program has played an invaluable role in helping Oregon become a leader in green jobs and technology. I agree that we need to take another look at not only the kinds of projects that qualify for the program, but also how the state implements it so the public is certain that the program is working to create jobs for Oregonians.
The citizens of Oregon should know that I am committed to making sure government is accountable and transparent. The BETC is a good program that requires continual re-evaluation to make sure the program is delivering the maximum benefit to the citizens of Oregon through clean energy and green jobs.
Ted Kulongoski is governor of Oregon.