BATON ROUGE (AP) — Louisiana will spend up to $15 million to clear a backlog of tax credits for homeowners who paid thousands to add solar panels to their property only to see the state abruptly end the tax breaks they expected to offset much of the cost.
Residents called it unfair to change the rules in 2015 and stall tax credits already in the pipeline as a budget-cutting maneuver, after people installed solar panels expecting to recoup a significant portion of the cost.
"I obeyed every facet of the law on the books at the time," John Neilson, a DeSoto Parish resident who fought for denied tax credits to be honored, told state senators.
Lawmakers overwhelmingly agreed in their recently ended legislative session to pay up to $5 million annually for three years for verified tax credits claimed for solar systems purchased and installed through 2015. They said it was an expense Louisiana should cover despite tight state finances.
"We need to do right by the taxpayers that didn't have enough warning on this issue," Rep. Julie Stokes, a Kenner Republican, said during House debate on the measure.
Gov. John Bel Edwards' office said Thursday that he signed the bill by Rep. Greg Cromer into law. Louisiana's revenue department said first payments will go out in December and January, with people deemed eligible getting their credits paid in three installments over three budget years.
When lawmakers created the solar tax credit in 2007, the state's price tag was estimated to be less than $500,000 a year to encourage clean energy investment and bolster a new industry in Louisiana.
But the tax break ballooned far beyond expectations, growing larger each year, with the state spending more than $130 million on individual income tax credits for solar installations within eight years, according to revenue department data.
The tax credit paid for 50 percent of the cost of a solar energy system, including installation, up to $12,500. A federal tax credit also further defrayed costs.
As lawmakers struggled through repeated budget gaps, they targeted the solar program to curb state spending. In 2015, they voted to phase out the tax credits and cap the remaining credits available, a move that retroactively affected credits already awaiting payment.
The revenue department says 1,290 claims for tax credits were denied for solar systems purchased and installed by the end of 2015.
People who installed the systems said they didn't receive enough notice of the changes. They said in some instances companies installing the systems knew of the dwindling number of available tax credits but didn't warn them.
Neilson, a water district administrator in DeSoto Parish, told senators he installed his solar panels in the first half of 2015, when the law provided the $12,500 rebate. He said he wouldn't have done the installation if the credit hadn't existed. And he called it unfair to retroactively deny people money promised under state law.
"If the members of this organization of the Legislature changed the speed limit today to 55 on the interstate and then you wrote me a ticket for speeding two years ago, that would be similar to what's happened in my case," he said.
Cromer, a Slidell Republican, said homeowners have struggled with thousands in unexpected debts from solar panel installations, debts growing larger with interest charges.
"I know it's going to be a burden to the state," Cromer told his House colleagues, but he said Louisiana should "honor its commitments to our constituents."
– by AP Reporter Melinda Deslatte
