Big Green-Energy got a break this week from the negative fall-out that has clouded its prospects since the collapse of Solyndra Inc., the solar-power manufacturer and darling of the Obama administration. The relief was expected and delivered, and the doors are open again for dozens of green-energy companies to line up in Sacramento and ask for tax relief. It's also now official: companies seeking these tax benefits can do so with little fear some state bureaucrat will be looking at their bottom-line to see if their business has a future - or, like Solyndra, is headed for the trashbin.
When Solyndra went famously bankrupt last month and FBI agents rummaged through its files with a search warrant, Big Green found itself playing defense amid charges that their industry was playing "crony capitalism" with tax dollars. State treasurer Bill Lockyer, a long-time cheerleader for alternative energy, seemed to take the controversy to heart when he suspended accepting new applications from green-energy companies seeking tax breaks from California. Lockyer said the Solyndra situation demanded a review of government subsidies for these firms. Under a program administered by Lockyer's office, Solyndra has been exempted from paying about $24 million in sales taxes to the state, an amount that pales in comparison to the $535 million loan the Obama administration provided to the politically-connected Fremont-based company.
But Lockyer's decision was only a minor bump in the road. Big Green, after all, is one of the fastest growing industries in California, and it has a raft of high-powered supporters, from Gov. Brown to a slew of former lawmakers hawking green-ware up and down the state.
So it was not unexpected when Lockyer informed a roomful of state senators Wednesday that his review had found the state sales tax exemption program for Big Green was a great idea and that he's ready to resume accepting new applications from companies seeking the breaks. According to Bloomberg News, Lockyer's report was treated as a clean bill of health by state Sen. Alex Padilla, D-Panorama City, author of the legislation creating the tax exemption.
"To the extent that people are looking at Solyndra and saying that's why we should end this program, it's absolutely unjustified," Senator Alex Padilla, the Pacoima Democrat who sponsored the bill that created the tax breaks, said in an interview. "If there were to be any changes, they would be very minor."
More from Bloomberg:
...(T)he program is intended to promote the growth of alternative energy manufacturing plants in California and complements the state's push for renewable energy. (Lockyer) said nearly 70 percent of all businesses do not make it past eight years, and that risk extends to clean energy companies such as Solyndra. "We take some risks by having this policy in place, and we probably take a bigger risk by never having the tax exclusion because the jobs and investments don't come to California," Lockyer said Wednesday. "That's a bigger risk and, one we need to be very concerned about."
Lockyer is chairman of the state's Alternative Energy and Advanced Transportation Financing Authority, which has granted sales-tax exemptions valued at $104 million to 33 companies, public agencies and research institutions. Recipients have used about $31.6 million of the breaks so far, with Solyndra accounting for almost 80 percent, state figures show.
Here at LA Observed, it was reported last month that an emissary from Lockyer's office visited the Solyndra plant in June (three months before the firm filed for bankruptcy) to see what wonders the state tax breaks had wrought. She came away deeply impressed and charmed, according to official minutes of a state agency meeting, by the "singing robots" deployed in Solyndra's assembly line. Less noticeable to her was the fact that the company's unique solar tubes were being built at such a high cost per unit that they were being battered in the marketplace by cheaper, competing technologies, that Solyndra had one foot in the grave and that the firm would soon be pink-slipping 1,000 of its employees. But those singing robots - you've got to love them!
Meantime, Lockyer tried to disabuse everyone - possibly including LA Observed - that his office should have any duty to evaluate the viability of the business plans of companies seeking the tax breaks. Apparently, Lockyer sees no difference in providing this government "gift" to viable companies or to firms teetering on the edge of bankruptcy. Here's what San Francisco newspaper said about Lockyer's take on his office's responsibilities:
In response to questions from state senators, Lockyer said his office was aware of disturbing news about Solyndra's economic health that had begun to emerge even before the company was approved for a tax subsidy in November 2010. But Lockyer said the law didn't require his office to evaluate Solyndra's books before issuing the tax break, adding that even in retrospect, he continued to believe it would be wrong for his office to do so. It would be "imprudent of us to pick winners and losers as a matter of general policy." That position was supported by both Democratic lawmakers, who favor additional incentives for alternative energy,and Republicans, who want taxes to be lower for all businesses.
In short, everyone's on board the Big Green train.