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Golden State Gets Burned By Solyndra

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    California State Treasurer Bill Lockyer on his call to suspend the energy tax exemption.

  • Duration 7:30
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Breaking news all over the country public officials are rethinking their commitments to Green energy projects in light of the so lender of fiasco.

No where is the soul searching deeper than and so lenders home state of California.

Our everybody I'm David -- thanks for joining us now so lender agreed in November less -- a year ago.

To expand its factory in employ Californians and exchange -- 25 million dollar tax exemption a sales tax on manufacturing equipment.

A -- ten months later slender close shop and abruptly fired its workers now lot of Californians.

Are asking to head of the agency that oversees the tax exemptions also the Green energy projects whether -- -- going to get their money back.

He is California treasurer Bill Lockyer who joins us now bill thank you so much for coming -- up.

How much is is that 25 million dollar figure pretty accurate is that how much.

California's essentially gave cylinder.

Well that's how much the tax exemption on their manufacturing.

Equipment was worth.

They did spend a lot of money installing -- in hiring people so it probably is a net loss of about half that amount.

Now -- the entire program only gave out about 35 million social -- got a huge share of that 60s65%.

Of that.

-- -- some people are saying that this law was just developed for so lenders -- a fair.

Our characterization.

No actually it's been aloft for I'm meeting New Year's.

It was -- -- a couple of years ago to.

Include this sort of Green recyclable.

Type energy solar and other things.

Tesla Motors was one of the companies that qualified for electric car manufacturing breaks.

So.

They just happen to be the first in the Q.

About 100.

Million.

Has been authorized.

Other companies are yet to spend the money they don't get the deal they don't get the tax break until they spend the money in California.

Our budget but -- taxpayers are wondering if any of that money's gonna come back to them you know of course that the real scandal of slender one of them.

Is that the private investors are ahead of the taxpayers.

In terms of people to get recompense definitive the company goes broke which it did is at the same for California taxpayers.

Well -- down the line that we didn't have any deal like that that apparently the federal energy agency did.

We're just in the line of potential creditors in the normal bankruptcy.

Type situation.

Bill are you -- not are you shocked by what happen missile under because you we have the president of course famously.

Coming -- saying everything is fighting even.

As or as late as just a couple of months ago people White House were complementing -- -- writing memos about -- everything looks.

Terrific.

Are you shocked about what happened.

Well the executive officers of the company kept claiming everything was fine until very very recently.

And so on is that is an error in what you have to do do due diligence to double check whether what they're saying it's hogwash which clearly it was.

Well actually we don't know every state in the country.

Has an automatic.

Exemption.

For making an investment in manufacturing.

This sort.

California is the only state.

That tries to determine as best we can.

Whether it will men out positively to the -- are not so we do this but for analysis.

That does not include an analysis of their financials.

Because we don't have the capacity to do that.

But we look at the application.

How many jobs are you gonna create a much.

Equipment are you spending money on and so on.

So we actually have a more rigorous test than every other state in the country.

But at the same time all you anyplace they'll beat you -- forgive -- all you had to do was it was go down there and some of the people we're in solar project we -- to TJ Rodgers and others who said it was clear He Joseph three years ago that what's a leader was doing was a terrible business model.

And you look at their their facilities they spent 733.

Million dollars.

On this these incredible 300000 square foot class Alice it had.

Equivalent of five football fields that robots that -- Disney -- spot light showers.

With liquid -- and these guys were spending money like the Enron people work.

They were spending money in a way that appears to be reckless there's no doubt about that.

You know it's very easy as hindsight to say it was a failed be a business model but when they started up.

The market for their product was several hundred times banner.

Then it was after huge Chinese.

Subsidize.

Dent panels hit the market in the.

It isn't quite -- severe problem -- bill and isn't this really the problem with government investment in companies like cylinder anytime you have.

Government investment in it you lose a certain amount of flexibility.

You have committees that look over things that clearly miss things.

When it comes to an operation that's totally in the private sector there's more flexibility to change.

According to what the world market it as and that's what a lot of solar companies -- we're gonna have one solar represented very cinemanow I'm sure you know.

Coming on next who's who's gonna talk about that how other companies were more flexible.

Well I don't think it's because of government investment that there are model failed or that they were inflexible.

It with respect to this this is simply saying you create manufacturing jobs in California.

And that's all kinds of companies.

In recyclables and solar in electrical auto in other manufacturing.

Ditches.

You create jobs in California we want you here.

Will get you a tax break we're not capable and no one ever thinks government should pick winners and losers.

We just have a new path that's -- with cylinder no that's exactly.

No doubt are no second or that there are pot that -- not seen I've seen a pilot applications for some -- -- didn't -- loan guarantees.

There is some money was not in went out and losers.

Well I don't know what the federal government did.

Right in California.

It's a blanket policy as it is with respect to manufacturing.

In fifteen of the fifty states.

So we don't pick winners and losers we try to support manufacturing jobs in our state.

There's good jobs you know we want -- here were not change in the policy.

Now we are put it on pause.

Yeah -- if there's any way that we can improve it.

But the basic policy is one that's gonna continue okay.

We -- not not so bottom line is you're not changing your policy based on what happened with cylinder.

Correct.

That's right and you think that's -- can that He may miss California taxpayers will be satisfied with that.

Well.

-- you know we can't pick winners and losers we support manufacturing in our state as does every state in the United States of America.

We are the only state that doesn't have an automatic tax break.

We try to make sure they're gonna invest here and it's gonna work out we can't be right all the time we're right most of the time.

-- -- you have so much on your play we really appreciate the time you took whether it's a Bill Lockyer who is a very busy to busy yet treasurer of the great state of California.

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