Oklahoma's tax credit for renewable energy, called unsustainable by opponents, could end for new projects this summer under a bill passed Thursday by the state House.
House Bill 2298, by Speaker Charles McCall, R-Atoka, would end the zero-emissions tax credit July 1, more than three years earlier than its current sunset date.
The bill passed, 74-24, over the objections from some lawmakers that it could jeopardize wind projects already in an advanced stage of development. Supporters said the incentive had become unsustainable, with the state paying out more than $54 million in refunds in 2015. The measure now heads to the Senate.
The tax credit is worth 0.5 cents per kilowatt hour of electricity generated by renewable resources. It is refundable at 85 percent of its value and can be carried forward up to 10 years.
With lawmakers facing an estimated $878 million budget shortfall, HB 2298 supporters said it would help put the state on firmer financial footing in future years.
"We can't afford it," said Rep. Jon Echols, R-Oklahoma City, who presented the bill on behalf of McCall. "It's on an unsustainable path, and it will be best for the state to end it July 1."
House Democratic Leader Scott Inman, D-Del City, said ending the incentive early sends the wrong message to the business community, not just the wind industry. He said several projects in western Oklahoma could be affected by the early sunset date.
Other Democrats wondered why they haven't seen bills from the Republican leadership that changed the rates on gross production taxes for oil and gas.
"Are we going to take the same line with other giveaways, with other credits, the very low gross production tax, with all of these?" asked Rep. Emily Virgin, D-Norman. "Because if we don't, it seems like we're unfairly targeting wind."
Echols said lawmakers last year scaled back an incentive for economically at-risk oil wells. That saved an estimated $112 million.
"We made a significant cut on oil and gas last year while making no cut on wind last year," Echols said.
Rep. David Brumbaugh, R-Broken Arrow, said the wind industry has benefited from state incentives like a five-year property tax exemption and a manufacturing sales tax exemption in addition to the zero-emissions tax credit.
Brumbaugh said Oklahoma wind projects still could take advantage of a more generous federal production tax credit. The federal incentive, at 2.3 cents per kilowatt hour, is set to phase down to 40 percent of its value by 2019 before it ends.
Inman said he agreed the state's zero-emission tax credit should be reined in. He said the July 1 end date was too soon and suggested it be changed to the end of the year. In its current form, Inman called HB 2298 an anti-business measure.
"It kills projects currently under development, hundreds of millions of dollars of development in the state of Oklahoma," Inman said. "I'm going to honor the word of the state of Oklahoma to the business industry. Not just this, but to all. I want the state to grow, but you don't grow by breaking promise after promise to the people who want to make this state a better place."
Echols said he hoped ending the wind tax credit early could help pay for other legislative priorities like a teacher pay raise.
"Stop just writing next year's budget. Start writing the next four years' budget," Echols said. "This will not kill the wind industry in the state of Oklahoma. The state of Oklahoma will come out stronger as a result of getting on the right track with the wind industry. We can show we are committed, not to oil and gas, not to the wind industry, we are committed to our citizens."