Legislature may cover Iowans on waitlist for solar tax credits

CEDAR RAPIDS — Over 10 years, more than 4,600 Iowa homeowners have received nearly $15 million in tax credits for solar energy installations.

However, solar energy installations proved so popular that the $5 million Iowa lawmakers appropriated for the tax credits ran out. So rather than get their tax credit, nearly 3,000 homeowners were put on a waitlist.

And they’re still waiting.

Carol Sweeting of southeast Cedar Rapids said her experience makes her feel like the victim of a “bait and switch” by the state.

“A whole bunch of us got screwed in this deal,” said Gary Gromman of Cedar Rapids. He received a “Dear John” letter from the state rather than the $4,700 tax credit he expected after investing $35,000 in a solar system. The tax credit and the federal credit of about $9,000 made the installation affordable for the software engineer.

“I had an expectation the state would honor its word,” Gromman said.

Like others, Jason Burns of Solon was motivated to install a solar energy system to lower his electricity bills and do something to benefit the environment. Burns spent about $13,000 on a solar installation expecting to get about $1,700 on his state tax credit.

“People invested significant money,” Burns said. “People relied, to their detriment, on the government. They should keep their promises.”

He’s not alone. Christopher Rants, representing the Iowa Solar Energy Trade Association, told a House Ways and Means subcommittee Wednesday that although the Legislature decided last year not to extend the credit, “there are many Iowans who believe they were entitled to the tax credit, that they had upheld their half of the bargain” by investing in solar.

“You've got folks who didn't just go buy solar yesterday,” Rants said. “You have people on the waitlist who made their investment two years ago and were expecting their credit because at the time they made their investment the credit was ongoing.”

Not receiving the tax credit she was eligible for was “hard to swallow when the governor is saying there’s so much surplus we’re going to cut taxes,” Sweeting said.

House File 2395 would not extend or renew the tax credit, but would cover those credits homeowners applied for before the credit expired.

“That's my goal,” said the bill’s sponsor, Rep. Michael Bergan, R-Dorchester, who called the credit “an important investment in Iowa’s solar power options.”

According to information he received from the Department of Revenue, there were just shy of 1,500 homeowners who filed for $4.5 million in tax credits in 2020. The numbers are expected to be similar for 2021, he said.

It’s not just homeowners who benefit from the credit, according to Bergan, Rants and others who point out that the state has benefited from diversifying the Iowa’s energy portfolio and from whatever environmental benefits accrue.

“Since the credit started, but especially in the past few years we’ve been educating policymakers about the benefit and the amount of private investment that $5 million a year has spurred,” said Tyler Olson of SiteGen Solar in Cedar Rapids, a former Democratic legislator and a member of the solar trade association. Solar industry jobs in Iowa are spread across the 99 counties and have grown from 350 in 2015 to nearly 1,000 in 2019.

There is a companion bill in the Senate, Senate File 2326. Ways and Means Committee Chairman Dan Dawson, R-Council Bluffs, is on the subcommittee. He didn’t favor extending the tax credit last year, saying such credits have created a “patchwork” of tax relief that hindered comprehensive tax relief. The GOP-controlled Legislature approved “historic” tax relief in 2021 and again this year.

Dawson’s counterpart in the House, Ways and Means Chairman Lee Hein, R-Monticello, said in January he expected to get something done on the oversubscribed solar tax credit.

Covering the tax credits Iowa homeowners applied for over the past two years “I think this is the lowest bar,” Rep. Eric Gjerde, D-Cedar Rapids, said at the HF 2395 subcommittee hearing.

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