Library filed under Taxes & Subsidies from Oklahoma
The Oklahoma Senate has overwhelmingly voted yes on a bill that would move up the sunset date of the state’s wind power tax credits to July 1.
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.
Oklahoma wind developers are fresh off a record-setting year. Only Texas installed more wind capacity in 2016, a fact that thrusts the Sooner State's power markets into a sudden transition and is agitating opponents along the way.
Gov. Mary Fallin, R-Okla., recently released her proposed 2018 executive budget, which includes two new anti-wind tax proposals. The first proposal would end the zero-emission tax credit for wind facilities placed in service after 2017. The second proposal would begin taxing the production of wind energy at $0.005/kWh produced.
Signing this legislation was simply a mistake. What was promised to cost the state less than $2 million annually when I was in office has soared to $113 million for the 2014 tax year and is expected to cost billions in the future. Wind farms average 10 percent to 13 permanent jobs, which hardly lives up to the promised employment growth. ...As your former governor and a proud citizen of Oklahoma, I encourage us all to work together to end this subsidy no later than July 1, 2017.
State Rep. David Brumbaugh, author of House Bill 2246, said the cost is much more than officials first had in mind when they created the credit. He also said that wind generation has exceeded the goal set by former Gov. Brad Henry that renewable energy should make up 15 percent of the state's power generation by the year 2015. It's now at 20 percent, Brumbaugh said.
Oklahoma would become the second state to impose a tax on wind power, and its tax would be the nation's highest, under a proposal announced Monday by Gov. Mary Fallin. In her executive budget, Fallin proposed a 0.5 cent per kilowatt hour tax on electricity from wind generation. She also wants to sunset existing tax incentives for the wind industry earlier than planned.
State Sen. Bergstrom has filed a bill that would cap tax credits at $25 million statewide for electricity generated by zero emission facilities, including wind energy, and another that could use the savings to provide a graduated teacher pay raise over the next three years.
Outgoing Senate Finance Chairman Mike Mazzei addressed the Incentive Evaluation Commission recently in support of a report that examined the cost versus benefits of the state’s Zero Emission Facility tax credit. The PFM consulting group determined the cost significantly exceeds the benefits of the program, and recommends that the credit termination date should be accelerated.
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.
A group opposed to wind power incentives said Oklahoma's budget could be on the hook for as much as $5.2 billion in future claims through 2030 if the state's zero-emissions tax credit is allowed to continue, an amount the wind industry said is highly inflated.
Windwaste, an advocacy group pushing for a more equitable taxation on the wind industry, says under the current tax law, recent wind farm generation growth announcements and projects in the works could cost the state more than $2.4 billion over 10 years.
Thankfully, the lid has been blown off Oklahoma’s previously well-hidden wind subsidies. Projections that the Windfall Coalition and others provided to legislators over the past year are now being realized. With another budget shortfall looming over our state, legislators can no longer ignore the glaring deficit being largely driven by Oklahoma’s wind giveaway.
"Conventional wisdom says general revenue collections should rebound when oil stabilizes, but the reality is any rebound will be significantly hamstrung by wind incentives without legislative action. The revenue erosion wind incentives caused in May will be the new normal for years unless legislators act," Doerflinger said.
“The state paid more to wind companies in May than the general fund netted from all other corporate income taxpayers combined,” said Doerflinger in a statement. “How messed up is that?”
An Oklahoma House committee Monday defeated a bill designed to save the state $306 million over more than a decade by phasing out the state's zero emissions tax credit for the wind industry beginning at the end of 2017 rather than the end of 2020.
Oklahoma is in a budget crisis, and citizens' tax dollars are headed overseas in the form of breaks for the wind industry.
Schlomach adds that wind energy is thought to have many benefits; however, in reality, the perceived benefits are an economic waste.
As these overly generous subsidies are being called into question, the only leg the wind industry is purportedly standing on is that it is helping local schools. This could not be a more disingenuous argument. According to the wind industry's own research, state reimbursements — not wind companies — are responsible for the vast majority of “wind industry payments” to schools.
The signs were put up just two weeks after State Auditor Gary Jones wrote a scathing piece in the Tulsa World calling the subsidies “nothing short of a giveaway." In the piece, Jones said the state lost $88 million in tax credits, $44 million in sales taxes that were supposed to go to schools and $67 million in sales tax exemptions.