The New Orleans Times-Picayune decided to poke around for reactions to the effects of the 2015 change in the credit. Once the nation’s most generous, until the middle of last year it essentially gave back 50 percent of an installed system. Better, the credits were made refundable, so to pay for much of the system many buyers would take out a loan from the installers interest free for a period as long as reasonably expected to have the refund show up after filing income taxes – in addition to the 30 percent federal tax credit. And if the buyer still could not manage the several thousand dollars still owed, installers would lease it or price it for sale in a way to eat the difference, with the lucrative government giveaways still allowing them to profit.
But Act 31 of 2015 changed the game, capping the previously-unlimited program that had given away hundreds of millions of taxpayer dollars at $10 million distributed in each of fiscal years 2016 and 2017, and $5 million for the first half of FY 2018, then ending the subsidy permanently. This created a class of buyers who paid for systems in the first half of 2015 – FY 2015 – but only could file for the credit on their 2015 state income taxes starting the second half of FY 2016. Filings so far this calendar year, for systems installed in 2015, not only blew straight through the FY 2016 amount, but also the FY 2017 amount and all but $1 million of the truncated FY 2018 amount.
This means some who purchased in the first half of 2015, before the law changed, won’t see their taxpayer largesse for another year. For those who took out the loans, these will convert into high-interest instruments. And if they don’t have proper documentation that requires following up, they could miss out entirely on the taxpayer gift with the total cap likely breached in the near future.
The T-P reporter went out and collected a few sob stories from people in this transitory situation, who vented spleens at the state whose lawmakers did not create a process to award on the basis of date installed but on date received of a proper return. Yet this misplaces their frustration, for wise consumers always do their due diligence. The first of many bills limiting the credits was prefiled Apr. 1, and occasional news articles appeared from then about the subject, so anyone researching the matter would have seen the risk during the second quarter of the year.
Still, no publicity or legislative warning became apparent in the first quarter of 2015, so in that sense individuals who purchased or then did suffer a disadvantage – except that the installers themselves knew this was coming. Months prior to the introduction of the bill by former state Rep. Erich Ponti that would become the law, installers and their interest groups, knowing the state’s shaky budget outlook would put maximal pressure on policy-makers to pare credits, interfaced with Ponti and others to shape a bill it could tolerate, resulting in Act 31.
The question then becomes whether starting in 2015 installers told prospective customers about the changes likely to come that they themselves backed. Besides the fact that the article indicates a fair amount of blindsiding in the minds of system recipients, one in particular said the company told him of the change in the late summer – apparently weeks after the bill became law. (Unfortunately, the reporter did not have the wit, or chose not to report such information, to ask all interviewed whether each received information about the possibility of the law changing prior to purchase.) It would not be surprising if a number of companies never told customers of what they knew or what was happening, snaring many into a bridge loan in the hopes that the borrowers with the law’s passage would be forced into the period requiring them to pay the substantial interest and thereby increase the firm’s profits.
Of course, no one should ever completely bank on government providing a payout of any kind – witness the widespread and credible belief of many that they never will see their full, if any, Social Security benefits as defined in law today – as trusting government in these matters always contains a risk. Even though individuals can mitigate to some degree that risk through making themselves informed, the chance always remains.
However, even if their own trust in government and lack of due diligence may have contributed, most culpable in creating their situations in many cases likely are the installers. Don’t get mad at state government, get mad at those who sold you on a too-good-to-be-true-forever proposition.