OKLAHOMA CITY (AP) — The Oklahoma Legislature is poised to rein in tax subsidies for the wind energy industry that cost the state tens of millions of dollars each year, but the proposed changes would have no impact on the state budget for years.
Senate Finance Committee Chairman Mike Mazzei says a deal has been reached involving the wind industry, state officials and a landowner group that opposes the tax credits.
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. Mazzei says that exemption is expected to cost the state about $44 million in the upcoming fiscal year.
A second subsidy called the zero-emissions tax credit paid directly to wind companies based on how much power they produce is projected to cost the state another $25 million next year, Mazzei said.
"I think everyone has realized that at $70 million, the incentive programs were becoming more than the state could afford," said Mazzei, R-Tulsa, "but the incentives have resulted in the success of 30 active wind farms and an additional ten in development.
"So given the state's budget constraints, I'm very pleased that all the different parties involved in this process recognize that we had to scale back on the costs."
The zero-emissions tax credit will remain in place to keep Oklahoma competitive with other states in the so-called wind corridor that stretches from north Texas up to the Dakotas, Mazzei said.
A third tax credit that allows wind farms to qualify for an investment/new jobs tax credit also will be eliminated after Jan. 1, 2017, although the Oklahoma Tax Commission currently has no projections on how many wind companies may qualify for that subsidy.
Oklahoma rolled out the welcome mat for the wind industry a decade ago with lucrative tax incentives and a lax regulatory environment, but as the number of wind farms has skyrocketed, so too has the concern among landowners, especially in more densely populated areas in eastern Oklahoma.
"Our position is that maybe they should have been ended sooner," said Rick Mosier, a spokesman for the Oklahoma Property Rights Association, a group formed to fight against the wind industry tax credits. "The size and scope of those incentives grew, continued to grow, and will continue to grow. The state budget can't handle it."
Because wind companies can qualify for the five-year exemption until 2017, the state won't realize a cost savings until after 2021.
The bill ending the ad valorem exemption is pending in the House, while a separate measure eliminating the investment/new jobs credit is pending in the House.