MACo: Pricey Solar Tax Exemption Precludes Local Input

MACo Legislative Director Kevin Kinnally testified today in support with amendments on HB 954 Property – Tax – Solar Energy Systems before the House Ways and Means Committee.

This bill generally grants broad tax exemptions for specified community solar energy generating systems. The bill also designates certain solar energy property as a new subclass of personal property, authorizes local governments to set a lower personal property tax rate on solar energy equipment, and prohibits the State Department of Assessments and Taxation (SDAT) from considering the income attributable to a community solar energy generating system when assessing real property.

MACo appreciates the bill’s flexibility with personal property tax rates on solar energy equipment, as many counties are interested in promoting solar on rooftops, brownfields, or less desirable lands as alternatives to large-scale energy generation facilities. However, local personal property tax revenues would decrease by $3.5 million due to the tax exemption for community solar energy generating systems and other assessment changes, according to the bill’s fiscal note. Further, the fiscal note indicates that as solar energy generating systems become more viable, the potential decrease in local property tax revenues from the personal property exemption will be substantially higher than currently estimated.

From the MACo Testimony:

MACo generally supports legislation that provides local autonomy to determine the best way to provide tax incentives, rather than those that mandate reductions in local revenue sources. Mandated tax exemptions require counties to forego meaningful local revenues to support essential public services, even if the exemptions do not serve their best interests.

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MACo urges amendments to authorize rather than mandate a personal property tax exemption for specified solar property, and to strike the language that prohibits SDAT from considering the income attributable to a community solar energy generating system when determining a personal property assessment.

Counties stand ready to work with state policymakers to develop flexible and optional tools to create broad or targeted tax incentives, but resist state-mandated changes that preclude local input.

Follow MACo’s advocacy efforts during the 2021 legislative session on MACo’s Legislative Tracking Database.