Colorado economists announced that state discounts for purchasing heat pumps, e-bikes, and electric cars and trucks will be reduced by half next year.
This decision comes as the state faces a dismal revenue forecast, according to Emily Dohrman, a senior economist for the nonpartisan Legislative Council Staff.
During a quarterly meeting of the Joint Budget Committee, Dohrman explained that the planned tax credits, which were enacted in 2023 to encourage electric transportation and heating options, will be significantly slashed in 2026 because state economic forecasts predict a mere 2% revenue growth for the coming fiscal year.
Lawmakers had originally designed these green tax credits to be appealing for Coloradans, contingent on a 4% projected revenue growth.
Just months earlier, it appeared that the state’s revenue growth deadline would be met, but recent revisions to economic forecasts have dampened hopes for maintaining these incentives.
The new projections indicate that Colorado’s revenue will fall short of the necessary growth threshold, leading to the halving of state incentives.
The reduction in state credits coincides with Congressional Republicans’ proposals to eliminate federal incentives for electric vehicles, further jeopardizing financial support for Coloradans seeking to electrify their homes and transportation systems.
Transportation and buildings are two of the leading sectors contributing to greenhouse gas emissions in Colorado, and advocates for electric vehicles credited the combination of federal and state incentives for a spike in EV sales in Colorado last year.
Under the original plans, state tax credits for electric vehicles were slated to range between $1,500 and $8,000 depending on the vehicle type.
E-bikes were to benefit from a $500 credit, with $450 allotted to purchasers and $50 earmarked for retailers, while heat pump tax credits were expected to fall between $250 and $2,000 based on the system.
However, all these credits will now be halved amid the revised revenue forecasts.
Despite the cuts, a $2,500 bonus credit for electric vehicles priced below $35,000 will remain intact, as will other supportive programs like Vehicle Exchange Colorado, which assists income-qualified residents in replacing gas cars with electric ones.
Ari Rosenblum, a spokesperson for the Colorado Energy Office responsible for administering the tax credits, reaffirmed the office’s commitment to providing cost-saving incentives.
In light of the uncertainty in federal support for clean energy initiatives, Rosenblum expressed eagerness to work with the Colorado General Assembly to continue promoting cleaner and more affordable technologies.
GreenLatinos Colorado, a nonprofit advocating for Latino environmental issues, played a crucial role in establishing these tax credits and has been engaged in connecting communities of color and low-income Coloradans to them.
Ean Thomas Tafoya, state director for GreenLatinos Colorado, expressed deep disappointment at the planned cuts.
He emphasized that halving the credits will render heat pumps, e-bikes, and electric vehicles unaffordable for many, particularly those who live in areas most affected by air pollution, often linked to trucking activities.
“These are communities who are bearing the load every day of logistics,” Tafoya stated.
He highlighted the critical nature of these credits for improving health in these affected neighborhoods.
If the economic situation doesn’t improve, additional tax credits could be at risk.
For instance, a tax credit for businesses implementing programs designed to resolve workforce shortages depends on favorable economic conditions projected for September.
Similarly, a tax credit for parents of minor children hangs in the balance, awaiting a forecast in December.
The bleak economic outlook indicates that the legislature may need to enact spending cuts totaling at least $700 million relative to current plans, not accounting for significant proposed cuts to anti-poverty programs by Republican lawmakers in Washington, D.C., which could disrupt Colorado’s existing budget.
Members of the Joint Budget Committee noted the possibility of adjusting the tax credits before next year if the legislature is convened for a special session to address the budget.
However, the general assembly is not scheduled to reconvene until January.
image source from：coloradosun
