HSEA Executive Director Explains the Benefits of Solar to Hawaii's Economy

Posted on Sunday, September 30, 2012

Tax incentives sustain solar jobs, incentivize use and boost green policy

By Leslie Cole-Brooks

POSTED: 01:30 a.m. HST, Sep 30, 2012

First, solar tax credits create on the roof jobs in Hawaii for installers, manufacturers and suppliers. The state Department of Business, Economic Development and Tourism has estimated that in 2012 the solar industry comprised 20 percent of all construction income. Think about the revenue stream that these jobs create.

A rooftop installer, for instance, pays state income tax and contributes to the state unemployment fund and workers compensation fund. He then pays rent, buys groceries, gas and a night at the movies as a Hawaii state resident with a job.

His employer pays state income tax on the business profit and state general excise tax on all sales of products or services, as well as contributions to the unemployment and worker's compensation fund. How much do all of these tax revenues add up to? The Council on Revenues doesn't know because the state doesn't collect that kind of data.

Next, it doesn't make sense to base state economic policy on Council forecasts, if they are so limited in scope.

The Council on Revenues reduced its forecast for fiscal year 2013 by about $16 million, and council economists blame the downgrade on the cost of the renewable tax credit.

Yet actual state revenue for last year was stronger than forecast, to the tune of $306 million. Could it be that the real state revenues and forecasted revenue are at odds because the council fails to include the tax and other state revenues that the solar industry generates? Where did this $306 million come from?

But do we need the solar tax credit at all? Wouldn't taxpayers continue to follow the green wave and install solar without a state tax incentive? Unfortunately, no. The data shows that when tax credits and other incentives are reduced or eliminated, business drops off as well.

In 1985, for instance, when President Ronald Reagan eliminated the federal tax credit for solar hot water, installations in Hawaii plummeted by 93 percent. Subsequent changes in the credit amounts have shown a corresponding drop or increase in business, and there is no rational reason to believe that it would be any different now. Can Hawaii really afford to see such a large sector of the state's construction income drop away? Thank goodness all those installers have been paying into the unemployment fund.

Most importantly, the solar tax credit is not just an investment into Hawaii homes — the solar tax credit invests into the backbone of the state's economy as the price and reliability of energy drives economic stability.

Hawaii has the highest electricity rates in the nation, and we depend upon imported fossil fuels which have a very uncertain future. Consider the impact of high or unreliable fuel costs. Household budgets cut out discretionary spending to keep the lights on. Employers cut jobs and reduce employee hours and benefits to keep the business out of the red. Energy costs for state buildings and schools drain the state coffers and leave less revenue for other key costs such as salaries and pension funds. Who hasn't opened the monthly electric bill only to be shocked by the increase due to the fossil fuel surcharge?

So make no mistake: The solar tax credit is not just about jobs and economic revenues now. For each solar system installed, Hawaii has gained that much more in freedom from fossil fuels.

Finally, don't forget about the Hawaii Clean Energy Initiative that has set the goal of 70 percent clean energy by 2030. Not only does HCEI address our dangerous economic dependence on fossil fuels, but it also has the environmental benefit of reducing our fossil fuel consumption. Fossil fuels are dirty to extract, dangerous to transport, and produce greenhouse gases when burned.

When given a choice, I believe that the good people of Hawaii have the will and the heart to choose an energy source that is home made and does not contribute to environmental damage and suffering around the world.

So come on. If the solar tax credit takes more from the state's revenues than they contribute, then let's change the program. But let's base this discussion on the facts —all of them.

All the benefits need to be quantified, including outright tax revenues to the state, and the economic benefit of creating an energy economy that is dependable and predictable. Hawaii deserves an economic policy grounded in the facts, not lopsided forecasts based on incomplete information.

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