Articles filed under Taxes & Subsidies from Oklahoma
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.”
As expected, the Oklahoma House of Representatives voted 85-3 in favor of S.B.498, legislation that would eliminate the state's current property tax exemption for wind developers. S.B.498 - introduced by Rep. Earl Sears, R-District 11 - now heads to the Senate, which can either accept or reject the bill.
Under Senate Bill 498, the state would no longer offer a five-year property tax exemption for new wind energy developments. Existing wind facilities would keep the exemption. Sen. Mike Mazzei, R-Tulsa, one of the authors of the bill, said the legislation is needed because Oklahoma tax incentives for the wind power industry have grown more rapidly than intended.
In Oklahoma, state tax incentives for wind energy have been targeted by the Legislature as it grapples with a budget shortfall. Discussions continue at the Capitol about ending a five-year property tax exemption for new wind development, but keeping a half-cent per kilowatt-hour tax credit in place.
According to Sears, the bill reduces the wind energy tax credit to one-fifth of a cent per kilowatt hour for new wind power facilities starting in 2016 and would end the credit in 2025. The current structure of the tax incentive is that the industry receives a half of a cent per kilowatt hour.
“These credits were originally approved to encourage job growth through incentives for what was then a fledgling industry in this state,” Mazzai said. “That is no longer the case, so in a time of limited state resources, revisiting those incentives to ensure the benefits do not outweigh the cost is a responsible approach on behalf of Oklahoma taxpayers.
Oklahoma faces a budget shortfall of at least $300 million that could easily exceed $500 million. Yet we’re blowing up to $193 million annually on subsidies for industrial wind companies. That money would be better spent funding core government services such as education.
One side considers it a corporate welfare program that the state can no longer afford. The other describes it as an investment that will pay off in the long-term.
“The cost of these wind subsidies is mounting at an alarming rate and if we do not address the policies now, Oklahoma will suffer the consequences.”
To AWEA, project standstills are reason to revive the $23 per megawatt hour tax credit. But 22 years of tens of billions in subsidies is plenty. Oklahoma’s subsidies pale compared with Uncle Sam’s, but they’re still oversized. The industry says Oklahoma wind subsidies to date have been $120 million. With 1,711 operating windmills, that’s $700,000 per windmill. Plus Oklahoma pays additional amounts for each year a windmill operates.
“There is no cap or control over the amount of wind development in Oklahoma and consequentially there is no cap or control over the amount of tax credits the state will become obligated for,” said Rick Mosier of the Oklahoma Property Rights Association. “They are a blank check which we can’t afford.”