After broad opposition, House Finance Committee removes solar and film credits from tax overhaul and advances other provisions

The House Committee on Finance on May 20 heard nearly three hours of testimony on HB 13-69, a wide-ranging tax bill that would repeal or revise multiple tax credits and exemptions. After extensive public comment from renewable-energy firms, labor groups, airlines, farmers and environmental organizations, the committee voted to remove the bill's film and solar investment tax-credit sections for further study and to advance the remaining provisions with amendments and a deferred effective date.

The committee chair opened the agenda item saying the bill collected credits the auditor had identified as potential repeal candidates and that the chair had added film and solar credits to force public engagement. "If we're going to incentivize something, it should be either a direct grant, direct appropriation, or an RFP from a department," the chair said in explaining why the panel needed a fuller discussion of those credits.

Why it matters: HB 13-69 targeted several incentives that stakeholders say are essential to Hawaii's clean-energy transition, local jobs and aviation maintenance. Removing the solar and film provisions preserves current incentives while allowing the committee more time to weigh costs, distributional effects and program design.

What witnesses said

- Rocky Mould, executive director of the Hawaii Solar Energy Association, urged the committee to retain the solar credit and highlighted multiple benefits. "The solar tax credit really has been, a benefit to Hawaii and the people of Hawaii that has multiple salutorious benefits, for our economy, for our environment, and for our people," Mould said.

- Tom Yamachika of the Tax Foundation of Hawaii focused comments on two technical items targeted by the bill and noted policy rationales for treating certain deductions as part of general tax code structure. Yamachika told the committee that for a federal exemption the purpose is to "really level the playing field for, Hawaii suppliers." He also raised concerns about specific provisions the bill would change.

- Nahi Lani Parsons, executive director of the Hawaii Renewable Fuels Coalition, opposed the repeal of the renewable fuels production tax credit, saying it supports local feedstock agriculture and job creation.

- Jacob Aki, representing Hawaiian Airlines, said repeal of exemptions for aircraft leasing, maintenance and repairs would increase operating costs. "Taking away this would increase our operating cost by over 20,000,000," Aki said, and added that higher costs could mean reduced service or higher fares.

- Local solar and resiliency providers, including Ted Peck of Holuho Energy, Reno Irvin of Hawaii Unified, and several firms (Sunrun, Sunnova, Sunrun Inc., Revolucence Smart Home) described projects, jobs and resiliency hubs that rely on the credit. Peck said, "we currently do not give a tax credit to utility scale solar... this measure is considering removing the credit from homeowners or renters." Several firms asked for phasedown or safe-harbor provisions for projects already contracted.

- Environmental and community groups (350 Hawaii, Greenpeace Hawaii, Climate Protectors Hawaii) urged the committee to reject repeal of the solar investment credit and emphasized Hawaii's declared climate emergency. Sherry Pollock of 350 Hawaii said, "In an emergency, you don't put the brakes on. You accelerate your efforts to combat the crisis."

Committee action and staff guidance

After the public testimony and member questions, the committee split the bill. The chair announced that the solar and film credit sections would be removed from HB 13-69 for future, more detailed deliberation and that the committee would move forward with the remaining credits that had been identified in the auditor's report. The committee voted to pass the remainder of HB 13-69 with amendments and to defect the bill's effective date to July 1, 3000.

The chair explained the decision as a way to preserve current incentives while allowing the legislature time to answer questions about when, and how, subsidies should end without creating market distortions. "At some point in time ... there has to be an exit to subsidy," the chair said; the committee opted to remove the most politically sensitive sections and continue studying them.

What was not decided

The committee did not adopt a specific phaseout schedule or safe-harbor for qualifying projects; several testifiers requested either a phasedown or a safe-harbor to protect projects already under contract or in construction.

Ending

Committee members voted to advance the remaining provisions of HB 13-69 with amendments and with the bill's effective date deferred to July 1, 3000. The solar and film credits will return for separate committee consideration at a later date.