The Hawaii Legislature
The Hawaii legislature voted to suspend tax credits for high-technology investments and infrastructure repairs to close a budget shortfall.
Some wind and solar companies had factored the tax credit for high-technology investments into their calculations for projects already built in Hawaii. The credits are taken over five years. Last year, lawmakers scaled back the amount of the credit and restricted investors without Hawaii tax liability from transferring their credits to Hawaii-based investors, typically in exchange for an equity investment in the project.
In late April this year, the Hawaii legislature voted to suspend credits that taxpayers had planned to claim in 2010, 2011 and 2012 on investments that have already been made. The changes are projected to raise $93 million a year in each of the three years. Affected companies have threatened suit, charging that the suspension violates their rights to “due process” under the US constitution. The state attorney general suggested in an opinion that that the action is constitutional; the tax credits are merely deferred rather than taken away.
The legislature also voted to deny the tax credits on any new investments after April this year, seven months earlier than they were already scheduled to expire. The governor is expected to sign both bills, but had not done so before the NewsWire went to press.
The case shows the risk that developers run with multi-year benefits as an incentive to invest in a projects when states become desperate for revenue.