July 1, 2008

State No Hot Spot for Solar Manufacturing

By Ed Taylor, The Tribune, Mesa, Ariz.

Jul. 1--Gov. Janet Napolitano believes Arizona can become the Persian Gulf of solar energy.

But the Arizona Legislature passed up a chance during its recently completed session to attract more solar manufacturing to the state.

Arizona has scored some major solar advances already, with the Solana generating plant planned by Arizona Public Service near Gila Bend and Arizona State University covering the roofs of its buildings with solar panels.

But for economic developers like Barry Broome, that's not enough.

Broome is the president of the Greater Phoenix Economic Council, and he has the task of attracting new businesses and jobs to the Valley. While plants like the APS Solana generating station are impressive, that's not where the real jobs are, Broome said.

Solana will employ about 85 workers. But factories that make solar panels and other components for such generating stations would offer high-wage employment to thousands, he said.

And for those types of facilities, Arizona is lagging behind even such non-sunny states as Oregon. That's because Arizona offers fewer financial incentives to those companies, he said.

Nine solar companies that looked seriously at the Valley have chosen to locate elsewhere, which amounts to $2.3 billion in investment capital and 3,880 jobs that went to neighboring states, he said.

But the Valley is still in the running for 11 solar manufacturing projects totaling $8.4 billion in investment and nearly 8,000 jobs, Broome said.

To improve their chances of selecting Arizona, Broome proposed a tax package to the Legislature that would give qualifying solar companies a property tax reduction and income tax credit. The measure generated support but died in the closing hours of this year's legislative session when it failed to come up for a vote in the Senate Friday night.

The bill was opposed by freemarket and taxpayer groups that said it unfairly favored one industry at the expense of others.

Kevin McCarthy, president of the Arizona Tax Research Association, said the property tax reduction for solar businesses would shift that tax burden onto homeowners and other businesses.

"Property taxes are a zerosum game," he said. "When one industry is given favorable treatment, it has to be made up on others."

Broome believes the lawmakers were so focused on getting the state budget approved that they didn't have enough time to consider the solar initiative.

Broome is uncertain if he will pursue the measure next year but added, "we are missing out on billions worth of investment."


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