SADOW: Let’s Not Tinker With That Alternative Fuel Tax Credit – Let’s Dump It Instead

Unintended consequences earlier this year in Louisiana caused a needless government flap over something that could have cost the state hundreds of millions of dollars for a purpose never imagined. A related time bomb remains that could hit the pocketbooks of the citizenry that not only does the state continue to seem unconcerned about, but also willing to extend.

Poor drafting of a law allowing huge tax credits on vehicles that could run on fuel that was a fraction non-petroleum-based, never intended by the Legislature, had the state on the hook for a potential large sum, until rescinded by Gov. Bobby Jindal on a technicality. But in the same past legislative session that did not, through (depending upon your view of certain legislators’ motives) lack of information or dalliance, address that issue, part of a bill made technical changes to an alternative fuels law that could hit the public harder.

In 2006, the Legislature unwisely passed Act 313, creating R.S. 3:4674 that mandates production of alternative fuels comprising at least two percent of fuel sales in the state if a substantial minimum (with the lowest trigger being 10 million for diesel fuel) got produced annually. That target never has come close to being reached; in fact, of the 28 states that produce any, Louisiana most recently ranked dead last in both capacity for and production of all alternative fuels at 1.5 million gallons.

Still, the statute remains on the books and this year the Legislature showed no intention of getting rid of it by passing Act 811 which made technical changes to it and a number of other laws. This despite recent budgetary actions in the state that have all but defunded alternative fuels subsidization and reflects the growing national trend, hastened at the beginning of this year by the end of national ethanol subsidies, towards a paring back of this kind of assistance, including a quest to repeal a similar national law already triggered.

Louisiana’s version, which at its core relies upon intrusive government telling what people could be made available for sale in order to placate anti-petroleum and rural-based special interests, not only would raise prices to consumers, but also would stunt growth in use of the one non-petroleum fuel that the state has found in abundance, natural gas. Consider that in 2010 over 732 million gallons of fuel were sold for road use, if the triggers were hit nearly ten times what currently is produced then would be mandated to be produced. Then if consumers don’t bite on the more expensive vehicles needed to run these fuels, they get hit when forcible production occurs and, unable to sell it all, producers pass on that cost to buyers of petroleum.

Even if that scenario appears far off, why wait to repeal this unneeded law? Instead of tinkering with it, the Legislature needs to follow the national lead and get rid of it. The best way to avoid bad consequences is to legislate to avoid them in the first place, rather than risk their manifestation.

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