Who is a member?
Our members are the local governments of Massachusetts and their elected and appointed leadership.
The Honorable Jay R. Kaufman, House Chair
The Honorable Michael J. Rodrigues, Senate Chair
Joint Committee on Revenue
State House, Boston
Dear Chairman Kaufman, Chairman Rodrigues, and Distinguished Committee Members,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to offer testimony on several bills before the Committee today concerning the taxable status of renewable energy equipment. We strongly urge the Committee to give an unfavorable report to any bills that would eliminate or restrict the ability of municipalities to tax or negotiate Payments-in-Lieu-of-Tax on renewable energy equipment.
The MMA would like to express its strong opposition to three bills relative to the taxable status of renewable energy equipment, including S. 1329, An Act Relative to the Equitable Taxation of Solar Systems; H. 2505, An Act Relative to Solar Taxation; and H. 2740, An Act to Modernize the Renewable Energy Property Tax Exemption. These bills represent a dramatic and unnecessary shift in tax policy that would be harmful to municipalities, and we urge you to protect the rights of cities and towns as they continue to work closely with the state to achieve our shared renewable energy goals.
Municipalities have been true partners in driving progressive energy and environmental policy across the Commonwealth. The Green Communities Act of 2008 (GCA), which had the strong support of the MMA, provided municipalities with a policy framework that includes critical tools and incentives to adopt sustainable and cost-effective approaches to meeting energy needs and environmental challenges at the local level. Our municipalities continue to work in concert with the Commonwealth in advancing the goals set forth in this commendable legislation. Last year’s comprehensive energy bill, An Act Relative to Competitively Priced Electricity in the Commonwealth, built upon the Green Communities Act and including numerous important policy measures to promote the continued success of renewable energy development in our cities and towns, including an increase in the net metering cap for municipalities from 2 percent to 3 percent.
A report issued last year by the organization Environment Massachusetts, Massachusetts’ Solar Leaders: The Cities and Towns at the Forefront of the Clean Energy Revolution, highlighted the central role of municipalities in making the state a leader in solar energy development. In fact, more than 340 of 351 municipalities in Massachusetts now host solar energy facilities, and many host multiple projects, resulting in an astounding 243MW of installed solar capacity statewide. This represents a 40-fold increase in capacity from 2007. In fact, only 7MW remain to reach the goal of 250MW in installed solar capacity by 2017 set by the GCA.
The Legislature is to be commended for creating a policy framework in which the renewable energy industry has clearly thrived. Despite our geographic disadvantage in terms of natural sunlight, Massachusetts is second only to California for its solar energy market. The renewable energy industry is incentivized at the federal and state levels, and is flourishing in Massachusetts. According to the Massachusetts Clean Energy Center, growth in clean energy jobs in the state outpaced overall economic growth in recent years by a factor of almost ten.
Under current law, renewable energy equipment that is behind the meter and serves as the primary or ancillary source of power for the property on which it is located is exempt from taxation. Larger renewable energy developments remain subject to taxation based on assessed value, or municipalities may negotiate at their discretion a payment-in-lieu-of-tax (PILOT) agreement with the renewable energy system developer. This is the system under which we have made such remarkable progress in seeing our installed solar capacity soar in cities and towns across the state.
However, the bills that are before you today, S. 1329, H. 2505 and H. 2740, would make a major change in tax law, by exempting larger-scale renewable energy equipment from the property tax and instead inserting a PILOT based on a fixed or restricted range of annual gross electricity sales from the developer to the municipality. These bills represent a dramatic and unnecessary policy shift that would have a harmful effect on cities and towns, removing local tax authority and undermining the ability of municipalities to negotiate a PILOT that is in the best interest of local taxpayers and residents.
The MMA has heard explicitly from local officials across Massachusetts, and none support the exemption of renewable energy systems or the imposition of a fixed or restricted PILOT rate. Many are taxing the renewable energy developments in their communities at their assessed values, and many have successfully negotiated PILOT agreements at varying rates based on the unique circumstances of a given project. Others have reported favorable PILOT negotiations that enable them to enjoy significant cost savings for the purchase of electricity through Power Purchase Agreements (PPAs). There is no need to change the current law.
Earlier this year, the Department of Revenue, with the support of the Department of Energy Resources, held comprehensive seminars across the state targeted to assessors to review protocols to assess renewable energy equipment under Massachusetts law. This type of collaboration between the state and municipalities further promotes a broadly shared understanding of the growing body of knowledge around assessing renewable energy equipment at the local level, and is to be commended.
The MMA appreciates your leadership on fiscal policy issues to protect municipalities, taxpayers, and the Commonwealth. Please reject S. 1329, H. 2505, and H. 2740. These bills would harm cities and towns, undermine local authority, and interfere with local tax policy.
If you have any questions regarding this issue, please do not hesitate to have your office contact John Robertson or Catherine Rollins of the MMA staff at any time.
Thank you very much.
Sincerely,
Geoffrey C. Beckwith
Executive Director, MMA