Baucus acknowledges need for work on tax extenders — GOP senator

Source: Nick Juliano, E&E reporter • Posted: Wednesday, December 18, 2013

Providing the most prominent acknowledgement to date that comprehensive tax reform may not happen before the 113th Congress adjourns, Senate Finance Chairman Max Baucus last week told a private meeting of committee members that they likely would have to address a raft of temporary tax breaks in isolation next year, a senior Republican on the panel told Greenwire today.

The Montana Democrat’s acknowledgement carries wide implications for wind energy developers, biofuels producers and building efficiency companies that rely on the temporary tax breaks known as extenders.

Those provisions, such as the production tax credit, are typically extended for a year or two at a time, usually toward the end of a congressional session. A dozen energy-related extenders were included in January’s “fiscal cliff” deal, but they are on track to expire at the end of this year

During an informal session with committee members last week, Baucus “said we’ve got to do tax extenders, which obviously would include the [PTC],” according to Sen. Charles Grassley (R-Iowa), a leading proponent of the credit who attended the session.

Sen. John Thune (R-S.D.), who has supported phasing out the PTC over several years, said that idea may get more attention when the committee’s focus turns to extenders. In a brief interview, he acknowledged it would be “really hard” to find enough support for another straightforward extension and suggested that “some level of reform” likely would be needed.

Conservative activists have made the PTC a top target this year, complicating its prospects for extension, especially in the Republican-controlled House. The wind industry has previously said it could live with a phase-out of the credit through 2019 but only in the context of a broader overhaul of the tax code.

In the meantime, Baucus is keeping his focus on comprehensive tax reform and is expected to release an energy-specific draft tomorrow.

A committee spokesman this morning declined to comment on a potential shift to extenders. But it is unlikely that the committee would take up such legislation until the spring or summer at the earliest. The temporary credits will disappear Dec. 31, but Congress can — and often does — make extensions retroactive to their previous expiration date, limiting some pressure to act quickly.

While many tax watchers have long expected that an extenders package would be necessary next year, Baucus and other senior tax writers have been wary to acknowledge that possibility for fear of taking some of the wind out of comprehensive tax reform’s sails.

“He hasn’t mentioned the word tax extenders until a week ago, because when you start talking about tax extenders, they think you’re giving up on tax reform,” Grassley said in a brief interview this morning.

More immediately, Baucus is expected to release a draft package tomorrow outlining an overhaul of numerous energy-related tax incentives in the context of his comprehensive tax reform push. Few details are known about the draft, but it is expected to address many of the industries that currently rely on extenders. Several Democrats on the Finance Committee have said they want a tax code overhaul to provide parity and long-term certainty for all energy sources supported through the tax code.

Some committee Democrats also have indicated to renewable energy proponents that they would support a move to an extenders package as soon as possible, but they have been wary to say so publicly for fear of getting out in front of Baucus, according to one source familiar with such discussions. Yesterday, 24 Democrats — none members of Finance — wrote a letter to Baucus requesting prompt action on the extenders (Greenwire, Dec. 16).

Sen. Mark Udall (D-Colo.), who last year delivered dozens of floor speeches in support of the PTC, will resume the effort in a new speech this afternoon urging an extension to the credit, according to a notice from his office.

Energy- and tax-policy watchers are still eagerly anticipating the details of Baucus’ upcoming draft, viewing it as — at the very least — a base line for a renewed tax reform push in the next Congress. If Democrats retain control of the Senate, the likely leader of that effort would be Energy and Natural Resources Chairman Ron Wyden (D-Ore.), who is in line to claim the Finance Committee gavel following Baucus’ retirement this year.

Wyden told reporters today that it was up to Baucus how to proceed, but that his preference was to handle energy tax issues through comprehensive tax reform. And he said he appreciated the extensive input Baucus sought in preparing the upcoming energy tax draft.

That said, Wyden noted that he was open to pursuing an extenders package, as long as it was consistent with the broader goals of tax reform. And he said such an approach may be necessary given indications from the House that tax reform was a less urgent priority in the lower chamber.

“If the House’s decision … holds and they have put tax reform back a bit in the queue,” Wyden said, “I’m not going to sit around and let the renewables — renewable energy resources, which are so important in my state — get clobbered as a result of inaction.”