NCPA - National Center for Policy Analysis

Alternative Fuels Promotion Leaves Arizona In Panic

November 2, 2000

In the last minutes of their session last spring, Arizona lawmakers rushed through legislation to encourage the state's residents to use alternative fuels. The program -- which was supposed to cost less than $5 million a year -- could cost the state $500 million to $800 million.

Gov. Jane Dee Hull admits that "nobody looked at the big picture when the bill was passed" and says she accepts a share of the blame for signing it.

  • The program promised to reimburse consumers for up to 50 percent of the purchase cost of a car that burns alternative fuels, pay 100 percent of the cost of converting an existing gas-fueled car to run on alternative fuels, and pay up to $400,000 for the establishment of each commercial alternative-fuels depot.
  • Since July, more than 22,000 Arizonans have filed applications averaging $21,966 for reimbursement -- even though there are only six alternative fueling stations in the Phoenix area and none in the rest of the state.
  • To qualify, car owners need only add another fuel source in addition to their conventional gasoline engine -- such as a small propane burner -- but need not actually use the alternative fuel source.
  • The speaker of the Arizona House, who sponsored the incentives, is reported to be under increasing scrutiny for his financial involvement with industries benefiting from the bill's passage.

With state officials scurrying around trying to figure out how to pay for the program, local governments, educators and health-care providers are said to be running scared of the fiscal impact.

Source: Ross E. Milloy, "Costly Plan to Promote Alternative Fuels Jolts Arizona," New York Times, November 2, 2000.


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