The Oregon Legislature has passed a bill that clamps down on green energy tax credits for some businesses but extends the credits to companies such as Barefoot Motors and Brammo Motorsports, which manufacture electric vehicles in Ashland.

The Oregon Legislature has passed a bill that clamps down on green energy tax credits for some businesses but extends the credits to companies such as Barefoot Motors and Brammo Motorsports, which manufacture electric vehicles in Ashland.

Costs to the state government from the Oregon Business Energy Tax Credit program grew by millions of dollars beyond estimates. Coupled with abuses of the credits, the costs prompted the Legislature to make cuts to the program in a bill that passed on Tuesday during a special session. Gov. Ted Kulongoski is expected to sign the bill.

Credits for projects such as windmill farms will be scaled back.

But a manufacturer of electric vehicles can now get up to $1.25 million in tax credits in order to expand, said Chris Allanach, an economist in the Legislative Revenue Office.

The credit for electric vehicle manufacturers originally was going to be extended only to businesses that make vehicles for highway use, he said.

That covers Brammo Motorsports, which makes electric motorcycles that can be used on highways.

But Barefoot Motors, maker of electric all-terrain vehicles, would not have qualified because its ATVs are used in places such as farms, forests and parks.

A change to the bill reforming the Oregon Business Energy Tax Credit program made electric ATV manufacturers eligible for the credits if their vehicles are used for agricultural, business and government use, Allanach said.

Sen. Alan Bates and Rep. Peter Buckley, both Ashland Democrats, championed the change that will extend the tax credit to businesses such as Barefoot Motors.

Barefoot Motors President Bob Acheson said the credits will allow the company to invest in new manufacturing equipment.

"We are definitely planning on expanding this year. The credits will definitely help us," Acheson said.

Previously, Barefoot Motors benefitted from the business tax credit only indirectly. A business that bought an electric ATV could earn a tax credit that equaled the difference in cost between a regular gas ATV and a more expensive electric ATV. That encouraged businesses to buy Barefoot Motors' vehicles, Acheson said.

While the Legislature expanded use of the tax credit for businesses that make certain electric vehicles, it reined in the credit in other areas in order to save $54.4 million over the current two-year budget. Costs for the tax credit over two years had threatened to rise by $100 million or more beyond the original price tag, The Statesman Journal reported on Wednesday.

Earlier investigations by The Oregonian revealed that state officials intentionally downplayed cost estimates, and that millions of dollars were wasted on projects that went bankrupt or never performed as promised.

As one example of abuses, The Oregonian reported that a Texas trucking firm got its trucks upgraded with fuel-saving technology, and then pocketed $3.9 million from selling Oregon tax credits it got for the upgrades. The Texas trucks drove less than 1 percent of their miles in Oregon.

Acheson said that businesses that buy Barefoot Motors electric ATVs must operate in Oregon and use the vehicles within the state in order to qualify for tax credits.

"There are safeguards so the state is funding Oregon businesses that are using the vehicle in Oregon and not taking it off to California," he said.

Bates said Barefoot Motors is the type of company that the Oregon Business Energy Tax Credit was designed to help.

"Barefoot Motors is an innovative company whose impact on Southern Oregon's economy will only grow, making these credits a wise investment on the part of the state," Bates said in a statement.

Bates noted in a speech before the Senate's Finance and Revenue Committee last week that Barefoot Motors purchases 40 percent of its component parts in Oregon, with 90 percent of parts coming from within the United States.

The business provides not only family-wage jobs and benefits to its employees who work in Ashland, but its expansion will help spur job growth in the component parts supply industry, Bates said.

Staff writer Vickie Aldous can be reached at 541-479-8199 or vlaldous@yahoo.com.