OKLAHOMA CITY — A bill that would retroactively cap tax credits for the wind industry could harm the state’s ability to attract and retain businesses, critics say.
Legislative panels on Thursday passed House Bill 3710, which would put a $35 million cap on the zero emission tax credit. Last year, lawmakers decided to sunset the tax credit in 10 years for new production. The clock began ticking July 1.
Sen. Marty Quinn, R-Claremore, carried the measure before the Senate Joint Committee on Appropriations and Budget, where it passed by a vote of 26-12. It also passed a counterpart panel in the House and now heads to the floor.
Quinn said the state could no longer afford the credit, adding that the state had been overly generous to the wind industry.
He said the state was expecting to have paid out $2 million to $3 million a year but has paid out in excess of $1 billion “that the state of Oklahoma did not have, could not afford.”
According to figures provided by the Oklahoma Tax Commission, the zero emission tax credit cost the state nearly $74 million in tax year 2016, up from slightly more than $18 million in tax year 2012.
The zero emission tax credit was passed in 2001, Quinn said. It was to sunset in 2011, but that deadline got extended, he said.
Sen. Casey Murdock, R-Felt, said the wind industry decided to do business in the state due to the incentives and made investment decisions based on them.
“Oklahoma’s word is worth something,” Murdock said. “We have to keep our promises.”
While the tax credit was poorly designed, it is not justifiable to change the game for investors who are already in Oklahoma, said Sen. AJ Griffin, R-Guthrie.
Due to the industry, the state is benefiting by having a lower-cost electricity that doesn’t pollute the environment, said Sen. Roland Pederson, R-Burlington.
“I encourage you to vote no even if it is a bad deal,” Pederson said.
Sen. Roger Thompson, R-Okemah, said the industry already took a hit when lawmakers put a sunset on the tax credit last year.
But Sen. Julie Daniels, R-Bartlesville, said the Legislature has let down taxpayers by modifying, expanding or extending the incentive long after the wind industry was well established in the state.
When the Legislature decided to subsidize an industry, it was essentially reaching into the pockets of taxpayers, taking money and giving it to companies from out of state and out of the country, Quinn said.
As a result, the state has had to rob revolving funds and pass bond issues to get by, he said.
Mark Yates, Oklahoma Wind Coalition executive director, said that “this is not a wind issue. It is a business issue.”
Changing the terms of the incentive sends the message “loud and clear Oklahoma is closed for business and we do not appreciate or want outside investment, regardless of industry,” Yates said.