Articles filed under Taxes & Subsidies from Oklahoma
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.”
State tax incentives for wind energy producers were created when the industry was in its infancy and may need to be re-examined in light of lawmakers' concern over their growing cost, the head of an industry trade group told members of a Senate panel on Tuesday.
The Oklahoma Tax Commission has said it expects to pay nearly $12 million to producers of renewable energy — mostly wind farms — in zero-emission tax credits this year. The commission projects those payments to swell to $19.1 million by 2018.
Dank said the wind tax credits, among the most costly issued by state government, benefit some companies that are selling the power they generate to other states. "The Oklahoma taxpayers are being asked to subsidize electric customers in Tennessee and Alabama," he said.
Rep. David Dank, chairman of the Task Force on State Tax Credits and Economic Incentives, said the fact that the tax credits being analyzed are transferrable is particularly troubling. This means the tax credits are frequently sold for less than their value to reduce the tax liability of companies in an unrelated industry.
A moratorium on a state wind energy tax credit still will go into effect July 1, but the length of time it will last has been cut in half. Curt Roggow, government relations consultant for The Wind Coalition and the city of Enid, said the state's moratorium on the production tax credit has been reduced from two years to one year, following state budget talks last week.
The Senate Bill 1267, which calls for the scrapping of a number of tax credits, has been approved by the Senate. It will reportedly save $25million, with $600,000 of that earmarked for the zero-emission facility tax credit. The zero-emission tax credit was passed in 2005.
Wind industry officials are worried that pending legislation to put a two-year moratorium on tax credits for electricity generated by zero emissions facilities could kill the industry's growth prospects in Oklahoma.
Producers, lobbyists and analysts are watching closely as Congress continues to weigh numerous tax provisions related to both renewable sources and to traditional oil and natural gas. Action this week was in the Senate, where an overwhelming majority approved an amendment dealing with tax breaks for renewable energy to House Resolution 3221, the Foreclosure Prevention Act of 2008. ...One analyst and an electricity producer, in fact, were watching one issue specifically - the extension of a tax credit through 2009 for producing electricity from renewable sources, such as wind. Simply put? They were hoping for a longer extension.
OKLAHOMA CITY (AP) - Consumers who purchase wind turbines to provide electricity for their homes would get a tax break under a bill approved Tuesday by the Oklahoma Senate. Under the bill, consumers could get a 40 percent tax credit on the cost of a wind turbine. Critics said it was not economically feasible for most homeowners since the average cost of a wind turbine for home use is about $50,000. Some objected to the bill because it also gives the same tax credit to solar energy devices. Sen. Mike Johnson, R-Kingfisher, called the bill "irresponsible."
Wind power is booming — not necessarily because of the environmental benefits, but because of the cash they spin off.