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Lawmakers Keep Renewable Taxes Out of Budget Reconciliation Bill

March 10, 2008
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Congress last week decided not to include the tax extenders for renewable energy and energy efficiency in the filibuster-proof budget "reconciliation bill," which could significantly lower the odds for the House-passed renewable tax package to get through the Senate.

Both the House Budget Committee and Senate Budget Committee Thursday approved nonbinding budget resolutions for fiscal year 2009, which establish limits for each appropriations bill during that year. Each resolution proposed funding for alternative energy initiatives, with the final legislation to be drafted by the tax-writing committees in the two houses.

However, neither budget committee took the bold step of incorporating renewable tax extenders in a "reconciliation bill," a move that would have avoided a Republican filibuster of a House renewable tax package in the Senate. Senate rules provide that a budget reconciliation measure, which traditionally addresses tax or revenue changes, cannot be filibustered.

The House last month passed by a wide margin Democratic legislation (HR 5351) that would extend tax breaks for renewable energy and energy efficiency at the expense of oil and natural gas producers. It would strip oil and gas companies of $18 billion in tax breaks over the next decade and re-invest them in renewable fuels, such as wind, solar, geothermal, cellulosic ethanol and biofuels, and promote energy efficiency. Many of the tax credits for renewable energy are due to expire at the end of the year (see NGI, March 3).

But the renewable tax package faces a precarious future in the Senate, where Republicans object to rolling back oil and gas tax breaks. To avoid the hurdles in the Senate, Democratic proponents had hoped to include the renewable tax credit package in a "budget reconciliation" measure.

Senate Budget Committee's budget resolution provides for $13.4 billion for renewable and energy efficiency tax incentives, and establishes a energy reserve fund for investing in clean energy and the environment. Final legislation incorporating these proposals would be drafted by the Senate Finance Committee and later sent to the full Senate, where it could face a Republican filibuster. .

Unconfirmed reports last week indicated that Sen. Maria Cantwell (D-WA), a member of the Senate finance panel, "was working hard to find a way to get the renewable energy tax extensions considered -- using revenue raisers other than those proposed to date that change the tax treatment of the oil and natural gas industries," said energy analysts Christine Tezak of Standford Group Co.

"It may be what needs to happen to get extensions enacted into law sooner rather than later this year. Indeed, moving away from the changes [to] oil and gas levies could be what allows the measure to garner enough votes to sidestep a filibuster and even avoid a veto threat from the [Bush] administration," she said.

The House Budget Committee, in its budget resolution, called for increased funding for efficient and renewable energy programs, rejected President Bush's cuts to energy research as well as weatherization assistance for lower income families. Committee Chairman John Spratt Jr. (D-SC) rejected Bush's proposal to cut the Low Income Home Energy Assistance Program (LIHEAP) by $359 million, or 15.2%, below the FY 2008 Instead, he proposed funding LIHEAP at $2.5 billion for FY 2009, $141 million above the FY 2008 level and $500 million above the president's request.

Moreover, Spratt rejected Bush's proposal to permit oil and natural gas leasing in the Arctic National Wildlife Refuge. A final bill reflecting these initiatives would be drafted by the House Ways and Means Committee.

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