Library filed under Taxes & Subsidies from Oklahoma
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.
Out of the $130-plus million in subsidies Oklahoma taxpayers hand over to wind companies every year, over $120 million literally is going to companies in Portugal, Italy, Spain, Germany, Venezuela, Texas, New York, Florida, Illinois, Maryland, and Georgia. Furthermore, the property taxes being trumpeted by wind lobbyists simply do not add up. The truth is taxpayers from across Oklahoma have paid the bulk of wind’s property taxes, not out-of-state and foreign wind developers.
Oklahoma Tax Commission paid wind companies $27.3 million in cash incentives for 2013, the most recent tax year for which data are available. That was up nearly 50 percent from the $18.2 million claimed the year before. ...Those claims far overshot the commission's own predictions two years ago that payments would swell to $19.1 million a year by 2018.
A senator from the windswept state of Oklahoma wants to remove a tax credit for wind energy from the tax code. ...Lankford contends the tax credit has outlived its usefulness and is a redundancy since 37 states already provide incentives for wind energy production. He said wind generation has grown 5,000 percent since the tax credit was instituted in 1992.
It comes down to whether TVA decides to step up its purchase of wind energy. Fracking has made natural gas abundant and cheap to burn in electric plants. Wind appears costly without tax breaks. But energy analysts figure gas prices eventually will rise. And long-term wind power contracts could lock in prices below the ultimate level gas reaches in a decade or more.
Tax exemptions and tax credits for wind energy cost the state nearly $49 million last year. Left unchanged, the price tag would have reached $77 million by 2018, according to estimates from the Oklahoma Tax Commission. Wind developments, however, still qualify for Zero Emission Tax Credits, which drew some of the heaviest criticism from Mosier and other opponents of wind subsidies because they are “open-ended.”
Senate Bill 498 by state Sen. Mike Mazzei, R-Tulsa, and Sears, signed May 20, repeals the ability of the wind industry to qualify for a five-year property tax exemption. This provides a good start in addressing the magnitude of industrial wind’s subsidies and negative impact on Oklahoma’s budget.
Under the deal, a five-year property tax exemption offered to wind farms would expire on Jan. 1, 2017, allowing time for several wind projects currently under construction to qualify for the credit. ...Because wind companies can qualify for the five-year exemption until 2017, the state won't realize a cost savings until after 2021.
Rep. Earl Sears, a Republican and chairman of the House Budget Committee, thinks industry reform is needed. “We have to take a look at all of these credits we are handing out,” he recently said. “They’re costing the state $36 million to $40 million per year. And we’re glad that most think that reform in the industry is necessary.”