Report calls wind tax credit too generous, calls for trim

An Oklahoma tax credit that provides millions of dollars to the wind industry yearly is overly generous and should be curtailed sooner than planned, according to a consultant's report considered by a state committee Friday.

The consultant, Public Financial Management, made recommendations on a series of tax incentive programs as required under a law enacted last year.

Oklahoma provides about $1 billion in business tax breaks yearly at a time when it has been facing huge shortfalls in revenue needed to provide core public services like education, health and public safety.

Many lawmakers say it's time to determine if these business incentives are providing adequate return on investment, and whether some should be cut.

The Incentive Evaluation Commission will resume consideration of the report Thursday and take public comment. Ultimately it will be up to the Legislature and the governor to act.

Largest of the batch of credits now under consideration is for energy production facilities that do not expel any emissions. Wind power is the biggest recipient of this credit, which had a financial impact of $113,236,509 in 2014, according to the consultant's report. Earlier this year, the Oklahoma Tax Commission reported $58.7 million credits claimed for tax year 2014.

This tax break is to close to new recipients on Jan. 1, 2021. The consultant recommended moving that end date to Jan. 1, 2018, for wind-generating facilities, or putting a cap on the credit to reduce state expenses.

"There has been significant increase in use of the credit, which may accelerate further in coming years," the consultant's report stated. "While the credit will be closed to new recipients in 2021, the additional possible eligible facilities, and the 10 years of credits for each, create a significant threat to the state budget.

"There are not current adequate protections such as caps to deal with possible future fiscal impact."

Rick Mosier, of the WindWaste group, applauded the report.

"WindWaste appreciates the work of the Incentive Evaluation Commission and its independent team of experts at the PFM Group for exposing the ridiculous cost of wind tax credits for the citizens of the state of Oklahoma and the devastating effect the credits are perpetrating on the state budget," he said.

"Industrial Wind can no longer hide behind 'expert' opinions regarding its value to the state bought and paid for by its various trade groups and lobbyists. The report shines a bright light on what little Oklahoma has received for the hundreds of millions of dollars in taxpayer money spent."

Jeff Clark, of the Wind Coalition, called the report "terrible."

"Looking at this report, my question is, 'Where is the rest of it?'" he said.

"It looks like the state received one-third of a report. This report talks about the cost, but it doesn't take any consideration of the benefit."

Clark said wind power saves money for utility ratepayers, provides funds for public education and provides renewable energy for companies that want to invest in Oklahoma.

"Oklahoma is in a perfect position to lead with gas and wind and this report is saying Oklahoma should shut its doors," he said.

The consultant also recommended that the state:

•Retain aerospace engineering incentives.
•Reconfigure aircraft tax exemptions.
•Retain but consider revising property tax exemptions for manufacturing.
•Retain the historic rehabilitation tax credit.
•Repeal the industrial access road program.
•Retain the Oklahoma Capital Investment Board, which is already subject to fiscal impact limits imposed by the Legislature.
•Repeal or allow to sunset as scheduled in 2024 the Film Enhancement Rebate Program.
•Reconfigure the quality events incentive act.

These are the first credits being looked at under a four-year program that will eventually examine all such business incentives.

The state is paying the consultant $239,691 a year to make recommendations on the tax breaks.