California Channel

State Treasurer Bill Lockyer at a hearing on tax breaks given to alternative energy companies

State Treasurer Bill Lockyer told lawmakers Wednesday that he continued to support a law that grants large tax breaks to alternative-energy companies — even though the bankrupt solar-panel manufacturer Solyndra was its first and largest recipient.

Solyndra was granted a $34.5 million subsidy under SB 71, a 2010 law championed by former Gov. Arnold Schwarzenegger that exempts alternative energy companies from paying taxes on purchases of new manufacturing equipment.

Lockyer's statements marked a departure from the stance he took last month. After The Bay Citizen revealed Solyndra's tax break, which the state granted without scrutinizing the company's finances, Lockyer called for a moratorium on issuing additional subsidies under the law, saying, "[W]e owe it to taxpayers to see if there is more we can do to make sure we don’t give their money to companies headed for a fall."

But on Wednesday, he told a joint hearing of two state Senate committees that SB 71 is a "wise and needed law" that incentivizes green-energy manufacturing and serves as "a model for how tax expenditure statutes ought to be written."

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 an interview following the hearing, state Sen. Alex Padilla (D-Los Angeles), who authored the law, said he continued to support the tax break. The state needs to do more keep alternative-energy jobs in California, he said, because many solar companies keep their headquarters and research operations in Silicon Valley, but do their manufacturing elsewhere.

But Lenny Goldberg of the California Tax Reform Association said there's little indication that giving renewable-energy companies a tax break is helping to keep jobs here. He cited a report from the state treasurer's office showing California had approved $104 million in tax breaks to secure just 653 manufacturing jobs, including 78 at Solyndra — amounting to $160,000 taxpayer dollars to subsidize a single position.

In addition, a number of Bay Area companies that received tax subsidies have decided to locate their larger factories elsewhere after other states offered more generous packages.

One of the solar-panel manufacturers that testified at the hearing, Stion Corporation of San Jose, was granted a $9 million tax break to buy manufacturing equipment, but decided to build its first major factory in Mississippi after that state offered a package of incentives worth $75 million.

"It's hard to know what benefits we actually get," Goldberg said. "There are many, many highly questionable elements."