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Fossil fuel proponents in the Louisiana House of Representatives were met with resistance Tuesday in a committee where they brought three different bills, one of which would have targeted solar and wind energy projects to make them ineligible for state tax breaks.
House Concurrent Resolution 6, sponsored by Rep. Danny McCormick, R-Oil City, would have specifically excluded wind and solar power plants from eligibility under the Industrial Tax Exemption Program (ITEP), which grants property tax exemptions to various industrial and manufacturing facilities in return for the creation of new jobs in the state.
McCormick, who owns M M Oil Co. and has previously filed legislation to help the industry, ultimately deferred the resolution voluntarily after it drew bipartisan opposition in the House Ways and Means Committee.
McCormick said he filed the bill to put solar and wind on an “equal playing field” with oil and gas. Companies that drill for oil and extract natural gas from the earth do not qualify for ITEP and neither should solar and wind companies, he claimed.
However, several committee members pointed out that oil and gas companies do receive ITEP incentives for their refineries, and power plants that generate electricity are also eligible.
Rep. Joseph Orgeron, R-Larose, explained that fossil fuels are first extracted from the earth, sent through pipelines to factories where they are manufactured into a different refined product, and then sent to power plants where they are burned and converted into electricity.
Solar and wind both generate electricity on the spot where the solar panels and windmills are located and thus should qualify for ITEP just as a gas power plant would, he said. Orgeron has cosponsored a bill to expand the size of wind energy projects off Louisiana’s coast.
“So I think to even the playing fields, I think if the electrical production facilities get ITEP, then these electrical production facilities should also get ITEP,” Orgeron said. “That’s the way I look at it.”
When Rep. Buddy Mincey, R-Denham Springs, a public education proponent and former Livingston Parish School Board member, echoed similar opposition, McCormick tweaked his argument, saying public schools would lose tax dollars if solar and wind are eligible for ITEP.
Mincey pointed out that local taxing bodies like school boards were given the option to determine whether to grant or deny individual ITEP incentives under a 2016 executive order Gov. John Bel Edwards issued.
Rep. Matthew Willard, D-New Orleans, said he was concerned that McCormick’s resolution would send the wrong message about a fast-growing industry that many large corporations will need to meet their own self-initiated climate goals.
“Just the missed opportunities that we could be foregoing by kind of being stuck in the past,” Willard said. “These renewable energies are here. They’re becoming more diverse and more widespread, and I just think it’s an awful idea for the Legislature to say, ‘No, we’re going to turn our back and just pass up these opportunities because we’re an oil and gas state.’”
McCormick continued with his argument, saying public school funding would be jeopardized.
“My concern would be we’re going to build a state dependent on an industry that has to not pay any severance tax, not pay any (property tax due to) ITEP,” McCormick said. “How are we going to fund our local schools? Where we going to get that money from?”
Just before presenting his resolution, McCormick offered a bill that would eliminate all severance taxes on oil and natural gas, costing the state an estimated $527 million over five years, according to a legislative fiscal note.
House Bill 716, which McCormick ultimately deferred, would have reduced the severance tax on oil by 1.5% annually over an eight-year period ending with no tax by 2030. It would likewise do the same for natural gas, resulting in a tax-free commodity by 2029.
“ You can’t really talk about lack of funding for education and stuff when you’re carrying a bill that’s going to take hundreds of millions of dollars away from the state,” Willard told McCormick.
Speaker Pro Tempore Tanner Magee, R-Houma, emphasized the same point, asking McCormick why, if he is opposed to tax breaks for wind and solar power because they don’t generate severance taxes for public education, would he file a bill to remove taxes on oil and gas. Why wouldn’t McCormick just file a bill to try to place severance taxes on wind and solar, he asked
Magee pressed further, asking if McCormick would vote for a severance tax bill on wind and solar. McCormick would not give a definitive answer and backpedaled from his comments.
“I think we’re getting confused on your questions,” McCormick told Magee.
“I think you’re getting confused on your own bill,” Magee replied.
“You don’t want ITEP on wind and solar because it doesn’t bring any money to the state ‘cause there’s no severance tax,” Magee added. “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 then moved to involuntarily defer McCormick’s bill, which would have meant the committee would have to vote to bring it back up for consideration. Before a vote could be held, McCormick deferred his resolution voluntarily.
Only two lawmakers expressed support for McCormick’s measure: Reps. Beau Beaullieu, R-New Iberia, and Wayne McMahen, R-Minden. Both said solar and wind farms do not do enough manufacturing to qualify for ITEP.
A third proposal, House Bill 167 by Rep. Phillip DeVillier, R-Eunice, would reduce severance taxes on oil but to a lesser extent than McCormick’s bill. DeVillier’s proposal would lower the severance tax gradually over eight years, ending with a rate of 8.5%. It would cost Louisiana $92.4 million over five years, according to a legislative fiscal note.
DeVillier voluntarily deferred the measure after the Louisiana Police Jury Association opposed it because it would reduce revenues for local governments and could cause the state to lose federal infrastructure funding. He said he would work with the group to try to come up with a better solution.
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