I believe there are several issues here that could bring about potential changes in the BETC policy:

1. The pass-through credits and deductions of 50% seem too high from the perspective of some lawmakers, along with the rate at which a company can sell credits. I've heard rumors the max deduction may be reduced to 35%, and the rate at which a company can sell credits may also be reduced.

2. Several groups and lawmakers have raised questions about what exactly gets BETC funding. There may be a move to narrow the definition of who/what can use it.

3. Wind power projects have been the single largest user of the BETC ( I believe). Questions are being raised about the level at which the state is subsidizing these projects, at the cost of taxpayers and the state's budget.

The BETC won't go away as Kulongoski strongly supports it, but I would venture to guess that there will be some tweaks made in the program, like what I've suggested above.

Jason is right.

And those of us who believe all tax credits should be examined under a microscope (are they getting value for the money? how are they being paid for? are they subsidizing people who really need the help or already established industries?) are tired of hearing that all those lazy, overpaid public employees should give back part of their salary, but by golly no one should ever question any aspect of any tax cut.

If West Linn Paper qualifies among “great examples of the impact the BETC has had on communities” – then I’d hate to hear about some of the lesser examples.

In the linked provided Brian Konen of West Linn Paper states, “Since 2000, the mill has invested about $22 million in capital projects related to conservation and process efficiency. A subset of those projects, costing a total of $6 million, received BETC incentives totaling a little more than $1million. All told, we estimate that the energy saved by the BETC-supported projects reduces our operational costs by about $2.4 million a year.”

In other words, this is a company that was already in the habit (to the tune of $16 million) of upgrading the efficiency of their equipment – NOT because of a gov’t handout – but because the full cost of each upgrade paid for itself with an already sufficient ROI. Given that track record it’s a stretch to argue that WLP needed a $1 million incentive to move forward with a $2.4 million a year ROI upgrade, meaning that $1 million provided no added benefit to the Oregon taxpayers who funded it.

One can hardly blame WPI for being good financial managers and claiming cash for their clunkers. But shame on BETC for managing the tax payers’ money so poorly.

@Jason. Actually, large scale wind projects are not the largest recipients of BETC. Conservation and efficiency projects lead the pack.

@LT. No one is opposed to closely examining all uses of state money either through direct program spending or through tax credits. It's just important to keep the range of important state policy goals in mind when making any changes.

@DJ. Obviously, the Harney County story is a large scale example of the impact of BETC. The WPL is just a smaller scale example. Are you just as dismissive of the impact in Harney County? And I'm not sure why using the BETC to achieve energy conservation as intended under the program is a poor use of taxpayer money. You are assuming that those efficiences would have happened without the BETC but you have no evidence to support that viewpoint.

Matt,

I stand corrected; however, wind is certainly at the top.

If you want more clean energy companies then make for a better business environment for all.

Probably one of the few things I agree with Mr Sheketoff on is targeted tax breaks. These are stupid for two reasons: 1) They don't get used to create more plant, they will probably get sold (a la SolarWOrld to WalMart) 2) Now we have a biddgin war among states on who can throw out the most up-front money.

Here's a crazy idea, why not just go to the clean energy companies and ask them - Why don't you want to come to Oregon? Then fix that. I can guarantee you they won't say not enough tax breaks.

Then again, when you have pols driving economic policy, I guess I shouldn't expect normal inteliigence.

Steve, I guess you'd rather have business executives driving economic policy? Oh wait, that's what gave us AIG, Bear Stearns, Enron, Worldcom, etc. Who then? The tea party?

What libertarians and anti-gov types seem to forget is that all big organizations are inefficient and do a lot of stupid things. Then again, so do small ones. They're all just made of people, all of whom do a lot of stupid things. It's the transparency of government that produces lots of poster children for the screamers of "waste, fraud and abuse." I've seen plenty of such in private companies too, it just doesn't come to light.

The answer to your complaints isn't to drown government in the bathtub. Constant vigilance is the price of liberty. We need to recruit and elect competent and honest people to office, demand they hire competent and honest managers, and hold all their feet to the fire when they come up short.

Sniping from the sidelines may make you feel good, but it doesn't help. In fact, it makes things worse, because it increases cynicism and decreases the critical public involvement needed for continuous improvement.

@Chuck. The job claims are based on compiled reports from companies that have implemented new projects in Oregon.

You continue to miss the point on why incentives such as BETC are an important part of the picture, which I'm a bit suprised by. While your math is correct in that a company that can afford the up front investment for conservation, efficiency, or renewable energy generation will end up getting ahead on the bottomline, it misses the key fact that it is that intitial investment that often proves prohibitive from a budgetary standpoint. All of these type of projects require the investment up front with the payout over the medium to long-term. Incentives like the BETC help companies, schools, and non-profit organizations make the math work in the near term so that everyone can benefit in the long term.

@Jason. Again, wind power is not at the top. In the current biennium it is 4th, behind conservation, efficiency, and solar.

"Oh wait, that's what gave us AIG, Bear Stearns, Enron, Worldcom, etc."

It also gave Oregon Nike, Intel, Genentech, Tektronix and a lot of well-paved streets and new homes in Hillsboro.

Is it perfect, no. But but if you want to make a case on govt-funded and selected indutries doing better than those formed by entrepeneurism, then OK, I'd love to hear it.

You can start by comparing USPS to UPS/FedEx - Discuss.

"It's the transparency of government"

You mean like: 1) The latest Health Care plan travesty 2) CoP raising water rates without PURB approval 3) The whole back door dealings with PERS that now have stuck the taxpayers with a huge bill that is eating up revenues 4) Bush's mis-adventures in Iraq

At least with private enterprise, you have a choice to fund/not fund (yes, they should have let AIG, GM, WorldCom, Enron et al die) unlike govt where we are forced to keep funding bad ideas with the only hope being un-electing someone 4 years from now after they do the damage.

"We need to recruit and elect competent and honest people to office"

Heave you seen what type of leaders our political system has given us? There are a few people with integrity, but go look at Congress' latest approval ratings.

"It also gave Oregon Nike, Intel, Genentech, Tektronix and a lot of well-paved streets and new homes in Hillsboro."

All of them, by the way, have moved their manufactoring facilities off shore.

"Is it perfect, no. But but if you want to make a case on govt-funded and selected indutries doing better than those formed by entrepeneurism ..."

Really? Is that the story you're sticking with? Or do you want to start counting all the tax breaks those 4 companies you listed have received over the last two decades?

"You can start by comparing USPS to UPS/FedEx - Discuss."

Discuss what 50 cents will buy you at UPS or FedEx.

Matt asks, “@DJ… are you just as dismissive of the impact in Harney County?” With respect to the Harney County story, Steven Grasty writes, “When Horizon Wind Energy decided to develop the Wheat Field wind project in Oregon instead of at another site in Washington, it was the Business Energy Tax Credit that tipped the scales. While Oregon has higher property taxes than Washington, the BETC helped to offset the overall tax liability for the project by almost half, making Oregon much more appealing.”

In other words, the BETC tax break was necessary to offset the negative impact that property taxes are having on business development in Harney County. Why not just reduce the property taxes in the first place? Why should it be up to the BETC or another targeted tax break to determine winners and losers? Grasty’s comments directly imply that lower property taxes alone would have spurred Horizon Wind to make the Wheat Field wind investment. One has to wonder what other investments – outside of energy and off of BETC radar – might have been made in Harney County had disincentivising property taxes not been in place to deter business development in the first place.

Furthermore, Grasty goes on to say, “I applaud the recent efforts by the state Department of Energy to develop "side boards" to ensure the BETC is used appropriately. But I caution against throwing the baby out with the bath water.” So - even Grasty sees “bath water” to be thrown out (i.e.: BETC waste).

Matt also says, “@DJ… You are assuming that those efficiencies (West Linn Paper) would have happened without the BETC but you have no evidence to support that viewpoint.” Matt, WLP already had a $16M track record…what more evidence do I need? I have no evidence the sun will rise tomorrow, but based on its track record I’m going to assume it will – how about you?

Matt,

In terms of dollar amounts, it's still high. And it's one of the items the legislature is looking at.

Matt, thanks for helping to prove my point.

Thanks to Scott for dealing with USPS vs. UPS/FedEx. Also, where were the latter when the nation was being built before 1950? The USPS has modified its business model with the times and will undoubtedly continue to do so. Maybe the time will come when it's no longer needed at all.

Your examples of poor govt policies are fine, but so what? Ask any govt flack and they could give you countless positive examples of increased efficiency and effectiveness. Some of them are probably even valid.

Again, any large organization can provide many examples of its own wonderfulness, and you could find many cases of inefficiency by looking under the covers. Govt is no worse than the private sector, and the transparency factor tends to make it better.

F&B, UPS began as a messenger service in downtown Seattle, WA in 1907. Does that predate 1950 enough for you?

The biggest problem w/BETC is that our governor callously and deliberately under represented the potential cost of the subsidies. then a state group horribly managed the process and handed out too many gimmee's to too many hair brained thinkers.

What I'd really like to see is an independent audit of the BETC program so we, the taxpayers, can see exactly how much benefit was/is derived from them. To me it's a given that targeted industries are going to promote rosy scenarios and other interested parties will provide more jaundiced data sets. in the BETC situation I have no problem philosophically with green industries receiving incentives to defray start up costs. But I wonder at the 50% pass through discount that gave Walmart a windfall.

With the new law requiring review of all tax credit expenditures before renewal, I think we would be greatly served if the state increased the budget for the auditor's office so they could produce some objective data and reporting. Otherwise it's going to be he said/she said from competing industries and advocacy groups with lots of heat and little light.

Scott in D wrote: "All of them, by the way, have moved their manufactoring facilities off shore."

For the companies you mentioned, the brain trust - knowledge workers - are still here in the good old USA for the most part, and Intel's most sophisticated fabs are still almost exclusively stateside.

These US knowledge workers make significant salaries resulting in higher tax revenues - income and property. For the factories that are off shore, the labor content is rather low; there is a high degree of automation. Finally, all the companies mentioned participate in the global market, with the bulk of their employment here in the US.

"It also gave Oregon Nike, Intel, Genentech, Tektronix and a lot of well-paved streets and new homes in Hillsboro." All of them, by the way, have moved their manufacturing facilities off shore.

Not quite, Intel still does a lot of wafer fabrication here in Oregon. However, almost all of these employers have increased hiring in the past 10-20 years they’ve been here.

"Is it perfect, no. But if you want to make a case on govt-funded and selected industries doing better than those formed by entrepreneurism ..."

Really? Is that the story you're sticking with? Or do you want to start counting all the tax breaks those 4 companies you listed have received over the last two decades?

OK, very slowly – YES I am sticking with that story, per my comments above: “I agree with Mr Sheketoff on is targeted tax breaks. These are stupid for two reasons:” However, if you ask which is better - Giving Intel a tax break vs. - Throwing $40M in tax dollars at PGE Park over the past 10 years

I think it’s pretty obvious which worked out better.

However, I don’t recall Nike or Intel getting tax breaks when they started here. Tax credits get abused by well-paid lobbyists duping politicians.

"You can start by comparing USPS to UPS/FedEx - Discuss." Discuss what 50 cents will buy you at UPS or FedEx.

Nothing - Discuss USPS having an exclusive franchise on letter delivery. Discuss who you use to ship packages with. Discuss USPS annually asking for a $1B+ subsidy vs. UPS/FedEx both making profits and paying taxes and giving good benefits and pay to employees.

"The USPS has modified its business model with the times and will undoubtedly continue to do so"

You haven't been there once it gets one second past closing time. Love to hear a modification that isn't in repsonse to anything UPS or FedEx have done.

"the transparency factor tends to make it better."

If you don't like the transparency in a private company then sell their stock or don't deal with them. Try that luxury with govt.

Any incentive program is subject to problems with "free riders", those who would (or should) have done what the incentive was supposed to promote, with or without the incentive. Given this reality, incentive programs should be reviewed periodically to see if they are still accomplishing their original purpose. Seems that is now happening, as it should. So what's the big deal?

A subtext to this whole discussion is that fans of (insert your favorite green or conservation idea here) have felt for a long time that they are disadvantaged by various tax and other breaks given to fossil fuel, nuclear, etc. And they are right. It's good to see Obama working to level that part of the playing field.

Another subtext is that fans of idea x felt they were all competing for subsidies in a zero sum game. Presto, you see advocates of wind power opposing solar advocates, energy efficiency advocates, and vice versa. The lobbyists for the old "business as usual" fossil, nuclear, gas guzzler industries, etc. must love to watch this cat fight!

Why don't we recognize that we need all of this stuff (well, maybe not gas guzzlers) in some way or other, then get on with it?

A good start would be to give low-cost 100% financing preference over direct subsidy by tax breaks, for things you want to promote. Or base the tax breaks on actual performance, audited before the tax breaks are realized.

Maybe this is why HB2626 passed nearly unanimously in the last session. It doesn't give away any tax dollars, and loan recipients ultimately have to figure out whether what they want to do is worth financing or not, at their risk.

Only problem with HB2626 is it is encrusted with bureaucratic constraints, when loan applicants for some parts of it should be greeted by "What took you so long?", instead of "Wait a minute, let's see how you're gonna rip us off?" Maybe that's appropriate for some large scale projects.

But I hope the legislature re-considers some of the go-slow constraints that got into HB2626, and remove some of the constraints to financing some of the consumer items (for example, additional insulation, good windows, solar water heating systems, all the stuff that already gets cut & dried incentive payments from Oregon Energy Trust) that should be no-brainers to finance.

"If you don't like the transparency in a private company then sell their stock or don't deal with them. Try that luxury with govt."

That kind of free-market nostrum not only rings hollow in light of the near collapse of the financial markets, it comes close to Marie Antoinette let-them-eat-cake cynicism. I wonder how many stockholders or investors in AIG or Merrill-Lynch had any idea how much risk they were subsidizing? It's very well to say don't buy stocks in companies with no transparency, but the opacity of the markets make it impossible to actually KNOW how transparent companies are. How can you make informed investment decisions, "sell their stock or don't deal with them" when only a handful of executives have an inkling, let alone fully understand, full extent of the risks the companies are taking. With headlines like "Will Investors Ever Trust Wall Street Again", I'd think a booster of modern market capitalism would be jumping up and down waving a big sign with Hooray for Transparency on it.

"but the opacity of the markets make it impossible to actually KNOW how transparent companies are."

If you studied AIG enough to realize waht they did for business and realize the general credit market was going to heck, then you could sell AIG stock (which I had a friend that did.) I think you confuse opacity with just sheer volume of information and determining its relevance.

For an example of the types of atrocities that this tax credit engenders, look no further than this article http://bit.ly/9wdOtp and the massive industrial wind farms planned for Steens mountain in Harney county. Sickening.

<h2>For a view of what a subsidized wind energy build-out would ultimately look like in Oregon and the US, look to the example of Hawaii, California, and Europe.</h2>