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Committee hears substitute to expand solar tax credit with limits; committee votes 'do not pass'
Summary
A committee substitute that would expand a solar tax credit (including corporate eligibility, a 10% cap for commercial property use, and an anti-double-dipping clause) was debated and a motion to ‘do not pass’ carried in committee. TRD’s fiscal comments and equity concerns featured heavily in questions.
A committee substitute to expand a state solar tax credit (the bill number was considered by the committee as a substitute) would have allowed third-party installations and broadened eligibility beyond residential taxpayers, but limited commercial use to 10% and barred “double dipping” with other incentives. Committee members, fiscal analysts, and TRD commentary focused on equity and fiscal impacts.
An expert for the bill summarized the two substantive changes in the substitute: a 10% cap on the portion of credit that could go to commercial properties if residential portions were not used, and a prohibition on using the same incentive under this bill and other tax credits (preventing “double dipping”). The expert also said the substitute did not increase the overall tax credit appropriation and that off-grid projects—particularly on tribal lands and in the Navajo Nation—would benefit most because combined federal and state incentives could reach roughly 70% of project cost.
Committee members cited the Department of Taxation and Revenue (TRD) comments in the fiscal information report, which warned that the credit “erodes horizontal equity” because only taxpayers who own property and can afford solar could use it, and that expanding eligibility to corporate entities would increase the tax expenditure and narrow the tax base. Representative Lundstrom and others expressed concerns that the credit primarily benefits taxpayers who own or can afford on-site systems, not renters or low-income households.
Ranking Member Duncan moved a motion for a “do not pass,” seconded by Representative Montoya. The committee called the roll and the chair announced that the committee’s motion of “do not pass” carried (committee announcement indicated the do-not-pass motion passed by a 6–5 margin). The chair and members said they appreciated the sponsor’s attempts to address known problems but cited outstanding equity and fiscal questions.
Why it matters: The substitute would have expanded eligibility and removed some barriers for off-grid and tribal communities, but members cited TRD’s concern that the change shifts tax benefits toward property owners and corporate actors and could reduce general fund revenue.
What’s next: The committee’s ‘do not pass’ disposition kills the substitute in committee; sponsors and staff indicated willingness to continue discussions on equity and targeting.
