WASHINGTON – Buffalo’s burgeoning SolarCity development got a big boost from Congress on Wednesday in the form of a tax and spending deal that would extend the solar energy investment tax credit for five years while allowing businesses to claim the tax break more quickly.
The expanded solar energy tax credit highlighted the tax and spending deal, which also includes several other items that could benefit metro Buffalo, including tax breaks to aid local developers, industry and farmers. The spending bill, meanwhile, promises more funding for the Niagara Falls Air Reserve Station, the Great Lakes and medical research.
Lawmakers predicted that the expanded solar tax credit, expected to be approved with both the tax and spending deals later this week, could lead to even more jobs at SolarCity, which currently expects to employ 1,460 when it opens its factory next year at RiverBend in South Buffalo.
“If any area of the nation is to benefit from this, it is Buffalo,” said Rep. Brian Higgins, D-Buffalo, who spearheaded a House letter-writing campaign to promote the expanded tax credit.
Sen. Charles E. Schumer, D-N.Y., who led the fight for extending the credit on the Senate side, said: “This is huge. I think that we could see even more jobs at SolarCity because of this.”
SolarCity’s stock price jumped by 34 percent Wednesday, closing at $53.69, upon news of the expanded tax break.
A SolarCity spokesman, Will Craven, declined to comment on the ramifications of the tax provision until after Congress passes it. But SolarCity CEO Lyndon Rive issued a statement lauding the tax agreement and urging its passage.
The tax credit offers businesses and homeowners a 30 percent break when they install solar energy systems, but that tax credit had been scheduled to drop to 10 percent for businesses after 2016.
The deal would boost the tax break up to 30 percent and then phase it back down to 10 percent over five years.
But perhaps more importantly, the tax deal would change when businesses and homeowners that install solar panels can claim their tax benefits.
Previously, the tax credit could only be claimed after solar energy projects were completed. But under the new congressional deal, businesses would be able to claim that tax credit the minute they begin installing a solar energy system.
“This will help power up thousands of jobs in Western New York,” Schumer said. “I am urging my colleagues on both sides of the aisle and in both chambers of Congress to vote for this bill so we can send this to the president’s desk.”
Only one local lawmaker – Rep. Chris Collins, R-Clarence – said he would oppose the bill, which also would extend a host of other popular tax credits.
He said he opposed extending those tax breaks for several years because doing so could make it harder for Congress to pass comprehensive tax reform in the coming years.
Collins also expressed opposition to the extension of tax credits for solar and wind energy projects, saying that “these are mature industries” that don’t need government help anymore.
Expanding those two tax credits came at a big price for Democratic leaders, who finally agreed to long-standing Republican demands to lift a ban on oil exports in exchange for the tax credits for renewable energy.
“The move flies in the face of other actions being taken to reduce oil use and attack climate change,” said Rhea S. Suh, president of the Natural Resources Defense Council.
Some congressional Democrats were talking about voting against the spending bill because it would repeal the ban on offshore oil sales, but Higgins said: “I don’t have that luxury. I’m from Buffalo.”
Meanwhile, Rep. Tom Reed, R-Corning, who was involved in drafting the tax bill on the House Ways and Means Committee, said that it made sense to pair the tax breaks for renewable energy with the lifting of the oil export ban. “When it comes to energy, I’m an all-of-the-above guy,” Reed said.
The solar energy tax break is part of what seems to be an all-of-the-above tax deal, which lawmakers will vote on separately from the spending package.
Also included in the tax deal were a five-year extension of the New Markets Tax Credit, which developer Howard A. Zemsky has said has been important to several Buffalo projects over the years.
In addition, the deal would make permanent the Research and Development Tax Credit, as well as a provision of the tax code that gives businesses and family farmers a deduction for investing in equipment.
That’s hugely important, Reed said, because it would encourage more investment.
“Having certainty in the tax code just makes common sense,” said Reed, who, along with Schumer, pushed for the changes.
Even Niagara County’s apple growers stand to benefit from the tax deal, which includes the CIDER Act, which reclassifies hard cider so that it is taxed at a lower rate than it had been under previous law. The legislation was sponsored by Schumer and Collins.
Individual taxpayers stand to benefit under the bill, as well. A “Cadillac tax” on high-end health insurance plans was delayed and the bill would make permanent a college tuition tax credit.
And while the big news in the congressional deal was on the tax side, there were also several provisions in the spending bill that would affect Western New York.
Perhaps most notably, the bill includes $7.7 million to construct new facilities at the Niagara airbase to accommodate the Air National Guard’s mission there regarding remotely piloted aircraft, commonly known as drones.
In addition, lawmakers agreed to boost funding for the Great Lakes Restoration Initiative – a basinwide cleanup effort – to $300 million, from the $250 million that President Obama had suggested. “It keeps federal Great Lakes restoration efforts on track, and it benefits millions of people,” said Todd L. Ambs, campaign director of the Healing Our Waters-Great Lakes Coalition.
Meanwhile, Higgins said the Buffalo Niagara Medical Campus could get a big boost from the $2 billion increase in funding for the National Institutes of Health. That’s the biggest increase in federal medical research funding in more than a decade.
“I think Buffalo will disproportionately benefit from this,” he said.
The spending bill also includes $91 million for the Defense Department’s Test and Evaluation/Science and Technology program. That’s a $9 million increase that could benefit CUBRC, a Cheektowaga-based defense contractor. “This funding is a critical investment for science and technology in Western New York, and would help CUBRC advance their research and military testing capabilities,” said Sen. Kirsten E. Gillibrand, D-N.Y., with Schumer, pushed for the increase.
Similarly, the spending bill would solidify funding for several other programs important to Western New York, including the Community Development Block Grant program, the Department of Transportation’s TIGER grant program and the High Intensity Drug Trafficking Area program.
The New York senators also won a 75-year renewal of the World Trade Center Health Program and a five-year, fully funded renewal of the September 11th Victim Compensation Fund.
“This agreement is incredible news for our 9/11 heroes and their families, and it is a testament to the extraordinary power that Americans can have when they raise their voice and demand action,” Gillibrand said.
All of Western New York’s federal lawmakers expect to vote for the spending bill, which fills in the blanks of a fiscal 2016 budget deal that lawmakers passed in October.
Budget hawks, though, weren’t happy with the tandem tax and spending deals.
The Concord Coalition, for example, said the tax deal would add $680 billion to the nation’s debt over the next decade.
“This may be the season for generosity, but not fiscal lunacy,” said Robert L. Bixby, the budget watchdog group’s executive director.