California panel resumes green energy tax breaks
The California Alternative Energy and Advanced Transportation Financing Authority had temporarily suspended the program after awarding $25 million in sales tax breaks to the failed Fremont solar startup Solyndra.
SACRAMENTO, Calif.—A state panel voted Tuesday to resume a tax break program for clean energy manufacturers after lawmakers found the effort has been working as intended to help foster alternative energy in California.
The California Alternative Energy and Advanced Transportation Financing Authority had temporarily suspended the program after awarding $25 million in sales tax breaks to the failed Fremont solar startup Solyndra.
After a review of regulations, state Treasurer Bill Lockyer said he still believes in the program. Lockyer is chairman of the authority.
“We learned from the experience with Solyndra’s abrupt business failure that we can improve the way we evaluate applicants and enforce state requirements to accomplish that objective,” Lockyer spokesman Joe DeAnda said in a statement. “We will work with the Legislature and the state’s own policies and procedures to make the changes we need.
Under legislation passed last year, the program allows qualified companies to waive the state sales tax when purchasing manufacturing equipment in California. It was intended to promote the growth of alternative energy manufacturing plants in the state and complement the state’s push for renewable energy. The state has approved 33 applicants for $104 million in sales tax exemptions, according to the treasurer’s office. Solyndra was among 11 companies that claimed some of those tax breaks. The company closed its doors Aug. 31 and has filed for bankruptcy protection.
It also is the subject of congressional inquiries because it received a $528 million federal loan that has become an embarrassment to the Obama administration. Lockyer told lawmakers during a hearing last week that despite the risks associated with new businesses, the tax break program remains worthwhile. He said it was different from a federal loan guarantee because it does not require the state to spend taxpayer money. Sen. Alex Padilla, D-Los Angeles, agreed.
“We will make improvements to this program, but we must not let the failure of one company deter us,” Padilla said in a statement. California is one of a few states that require businesses to pay sales tax on manufacturing equipment, which business and manufacturing groups say puts the state at a competitive disadvantage.
