Senate committee votes against bill to fund Salton Sea geothermal

Jake Henshaw
The Desert Sun
June 7, 2006

SACRAMENTO - A bid for a tax break to help develop the nation’s largest geothermal energy project near the Salton Sea stalled Wednesday in the Senate, a move that backers said endangers the project.

The Senate Local Government Committee defeated a bill by Assemblywoman Bonnie Garcia, R-Cathedral City that would have allowed Imperial County to grant CE Obsidian Energy LLC, or CalEnergy, a property tax cut for a $750 million geothermal plant on the south end of the Salton Sea.

Her measure, Assembly Bill 1966, may be reconsidered by the committee.

The project would create 550 construction jobs and 63 permanent positions, generating more than $300 million in local, state and federal taxes over the 30-year life of the plant, Garcia’s office said.

“Without it the project is dead,” Garcia said of the tax break.

But approval of the bill wouldn’t necessarily mean the project would be built, only that it would be economically viable and negotiations would continue with local officials.

No one testified against the bill or project, which backers said it has local government as well environmental support.

But some committee members questioned the wisdom of using local property taxes as a way to boost renewable energy production, arguing that there should be statewide incentives instead.

“This bill (has) the heart in the right place” with benefits for the local economy and renewable energy, said Assemblywoman Christine Kehoe, D-San Diego, who chairs the committee.

But, she added, “if we are going to look at public subsidizes (then) statewide incentives for alternative energy generation . . .would be better than inviting local property tax money into the game of closing the (financing) gap in a multi-hundred million dollar project.”

The bill also ran into concern that school and county officials would ask the state to backfill property tax losses for the project.

Garcia said she would take an amendment to ensure that local governments couldn’t get any state reimbursements for losses under the bill and promised to continue working on the other issues to keep her measure and the project alive.