SALT LAKE CITY — A lawmaker said the 14-year-old state income tax credit for rooftop solar systems will zap the education budget of $20 million this year and cost another $60 million next year if the Legislature doesn't act to prevent the hemorrhaging.
Rep. Jeremy Peterson, R-Ogden, told colleagues on the Legislature's Revenue and Taxation Interim Committee that the proliferation of rooftop solar systems and the accompanying $2,000 tax credit to homeowners are creating a real budget problem for Utah schools.
Peterson is proposing to phase out the tax credit by 2021 and incrementally reduce it by $500 each year until then. His legislative proposal, which advanced Wednesday with a committee vote, would set a cap of $4 million in available credits in 2018, and then reduce it by $1 million each year afterward until it ends.
"We want to put a fence around it, contain the bleeding," Peterson said. "The industry was given some training wheels, so to speak, with the tax credit to prop it up. It seems like it is time to pull those training wheels off and let it run on its own strength."
The proposal is opposed by the Utah Solar Energy Association, whose president argued the state is getting $313 million in direct economic benefit for that $20 million investment, benefits derived from the state's fastest-growing industry in terms of job creation.
"It would be my prediction that we get that $20 million back as a state, just in different buckets," said Ryan Evans, association president.
Peterson said the tax credit was approved in 2000 without any caps and at time when solar installation was largely flat in Utah. By 2012, with prices of systems making them more affordable, the rooftop solar industry began to take off and is moving at breakneck speed.
"We need to take a look at these incentives," he said. "It has become an education funding problem."
Multiple lawmakers on the committee said they like the environmental and self-sufficiency benefits that accrue with rooftop solar, but they questioned the need to continue to "subsidize" an industry that's doing so well.
Noting that some schools are on a "paper" budget, forcing teachers to hoard paper, Rep. Steve Eliason, R-Sandy, questioned the wisdom of continuing the tax credits.
"Twenty million dollars buys a lot of paper," Eliason said. "I think our schoolchildren could use this money."
Others questioned if it was fair to ask schoolchildren to continue to push "the car down the road," when it is capable of moving on its own power.
Evans and other solar advocates say a pending net metering case before the Public Service Commission — in which Rocky Mountain Power is proposing to charge solar customers new fees — coupled with an attack on the tax credit will bring an end to a thriving industry in Utah.
"That filing (before the commission) has already served to slow the industry tremendously," Evans said. "I think we could see an incredible loss of jobs."
Sarah Wright, executive director of Utah Clean Energy, said her organization wants to continue to work with Peterson as his proposal winds its way through the legislative process.
"It is our hope that we can find a solution that is fair and also mindful of the education system," Wright said.
Rep. Joel Briscoe, D-Salt Lake City, said the proposal moves the state in the wrong direction.
"We should carefully review the state’s support for all our energy industries, not just a select few. We need to approach these kinds of credits, and the future of our energy plan in Utah, as a transitional period," Briscoe said. "We need to be doing more, not less, for the health and economic success of the people and neighborhoods we represent."