California lawmakers on Wednesday will scrutinize a tax break program intended to promote the growth of alternative energy companies such as Solyndra, which filed for bankruptcy protection after being granted one of the exemptions.
State Sen. Alex Padilla, D-Los Angeles, authored the bill establishing the program and wants to find out if regulations need to be changed after the state awarded $25 million in sales tax breaks to the failed Fremont solar startup. Padilla will chair an afternoon committee hearing with a fellow Democrat, Sen. Lois Wolk of Davis.
The California Alternative Energy and Advanced Transportation Financing Authority has approved 33 applicants for $104 million in sales tax exemptions under the roughly year-old program, according to the state treasurer's office. The law allows qualified companies to waive the state sales tax when purchasing manufacturing equipment in California.
Last month, the treasurer suspended the program to new applicants while the authority reviewed its application process.
Solyndra was among 11 companies that have claimed some of those tax breaks. The company closed its doors Aug. 31 and has filed for bankruptcy protection. It also is the subject of congressional inquiries because it received a $528 million federal loan that has become an embarrassment to the Obama administration.
Padilla said California tax-break program should be assessed now that it has been in effect for a year. He wants to know whether the program is helping create jobs in the state and promoting the clean-energy industry, or is just giving away tax money that otherwise would come to the state.
"We have a responsibility to stop and evaluate the program to ensure it is meeting its goals of promoting and incentivizing California-based green manufacturing jobs," Padilla said in a statement. "We want to make sure there is accountability, transparency and tangible outcomes that benefit the state."
California is one of a few states that require businesses to pay sales tax on manufacturing equipment, which business and manufacturing groups say puts the state at a competitive disadvantage.
Then-Gov. Arnold Schwarzenegger signed Padilla's bill, SB71, in March 2010, when he was in the midst of an ambitious push to move California to the forefront in developing alternative energy. The bill passed with overwhelming bipartisan support.
Treasurer Bill Lockyer is expected to testify at Wednesday's hearing, along with analysts and representatives of companies that benefited from the program.