A compromise budget reached by Republicans in the state House and Senate, set to be announced Monday afternoon, will not include any provision to extend the credit or allow it to be reduced in steps over the next two years, sources say.
It appears that a tax credit supporting renewable energy in North Carolina will be allowed to expire.
The credit, along with state requirements that utilities increase the amount of energy from renewable sources they sell in the state, has been an important incentive in a solar boom in North Carolina in the last four years. In that time, the state has gone from no significant amount of solar power produced to ranking fourth in the nation, with just under 1,100 megawatts of capacity. This year, with the tax credit still in place, the state is on track for almost 800 megawatts of new capacity to be built by the end of the year.
A number of Republican legislators called by the Charlotte Business Journal did not return calls through early afternoon on Monday. Sen. Josh Stein, a Democrat from Wake County, says he understands the tax credit is not in the bill. He acknowledges that Democrats have been kept in the dark about the negotiations in the last week that produced a budget accord among the House and Senate leadership. But he says people who have been in contact with the Republican leadership have told him the credit will be allowed to die.
Additional sources who declined to go on the record before a 3 p.m. press conference on the budget by Republican legislative leaders confirm that no extension of the credit is in the bill.
Stein says he considers ending the credit to be a mistake. Proponents have argued that for every the state $1 spent on the tax credit, state and local governments have received $1.53 in new tax revenue. Opponents have argued that ending the tax credit would save taxpayers and utility customers money, even though the power is sold to utilities at mandated rates designed not to increase charges for power.
Earlier this year, the legislature did adopt what has been called a “soft landing” proposal for the tax credit. Projects that are already 80% finished when the year ends, but are not completed until early 2016, will still qualify for the credit.
Early in the year, there was a legislative effort to extend the tax credit, with many Republicans participating. Then after a surprising reversal engineered by renewable-energy opponents, proponents attempted to push for a phasing the credit out over two years. That effort never gained much traction.
The CBJ will have more on the fate of the tax credit and its potential after the budget is made public.