WRAL-TV recently highlighted a report released by NC Senate Democrats of a “potential” $1 billion dollar budget gap in the North Carolina. What the story fails to discuss is the poor track record of the Legislature’s Fiscal Research Division in accurately projecting revenue numbers over the last several years. In addition to consistently overestimating the “negative” effect tax cuts will have on revenue, this division has a documented poor track record when it comes to projecting costs of renewable energy tax credits.
This same Fiscal Research Division in 2009 estimated the cost of extending the sunset for the renewable energy tax credit expiring on Jan. 1, 2011 to Jan. 1, 2016 to be only $4 million for the five-year period from July 2009 to June 2014.
But the actual amount of the tax credits generated as a result of the extension, however, was $1.4 billion — more than 300 times that amount. This mistake by the division cost the taxpayers of North Carolina well over a billion dollars in lost revenue. But it did give the solar industry a nice paycheck at the expense of NC taxpayers.
| Year Installed | Year Tax Form Processed by NC DOR | NC Business ITC generated for Solar Energy | NC Business ITC generated for all Renewable Energy (including solar) | |||
| 2012 | 2013 | $136,569,136.00 | $161,492,484 | |||
| 2013 | 2014 | $252,396,192.00 | $268,249,275 | |||
| 2014 | 2015 | $389,849,647.00 | $403,188,674 | |||
| 2015 | 2016 | $691,443,257.00 | $700,172,092 | |||
| Total Credits Generated | $1,470,258,232.00 | $1,533,102,525.00 | ||||
More recently, in 2015, the Fiscal Research Division projected an impact of $183 million if the legislature adopted Senate Bill 37 “Renewable Energy Safe Harbor.”
But in 2015 the NC Department of Revenue reported nearly a billion dollars in credit applications. This represents another costly mistake for NC taxpayers and further proof that the numbers put out by the Fiscal Research Division should be taken with a grain of salt.
Or maybe the analyst preparing these estimates should spend less time in the sun …
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