Officials support proposed tax on turbines; Push to define true taxable cash values 

UPPER THUMB – Local governments are working under a tight deadline to develop a plan to substantiate what they believe are true taxable values for wind turbine developments. At the same time, they are throwing their support behind a special tax State Rep. Kurt E. Damrow has proposed for wind energy developments.

Wind companies pay personal property taxes for wind developments, and the taxable values are established by the Michigan Tax Commission. Those values – and, as a result, the amount of personal property taxes wind developers pay counties, local townships, schools and libraries – decrease each year because of depreciation. And, per an October ruling by the state commission, there will be a larger than previously established drop in values this year.

The county expects the decreased values will mean a roughly $260,000 loss in revenue from local wind developments this year, said Huron County Commissioner Ron Wruble.

What local officials – as well as officials from other areas of the state experiencing wind energy development – want to know is what information the state commission used to determine a decrease is necessary. Though two attempts have been made to obtain that information via Michigan Freedom of Information Act requests, the requested information still is unavailable, said Mike Krause, member of the Thumb Regional Renewable Energy Collaborative (TRREC).

In light of the immediacy of the situation, where counties will lose at least 20 percent of revenue from local wind developments, officials are focusing on proceeding with their own study of true cash valuations rather than waiting to get the information from the FOIA requests, Krause said. He said they have until early March to develop a plan substantiating what values they believe are correct because that’s when assessments are presented to townships.

At the same time, TRREC, the Michigan Association of Counties, Michigan Township Association and government officials from other counties experiencing wind development are supporting House Bills 5278 and 5279, which were sponsored by Damrow, R-Port Austin. The bills create a separate category to tax commercial wind developments. It’s called the Alternative Commercial Energy Systems (ACES). It previously included commercial wind, biomass and solar electric generating systems, but it’s been amended to include only wind, Damrow said.

“We will work on an agenda for commercial biomass and solar, but right now, time is of the essence (for wind developments),” he said.

If lawmakers in Lansing approve the ACES tax, rather than paying personal property taxes, wind developers would make ACES payments. The payments either would be a base fee that’s established for each system based on the rated megawatt hours each unit will produce, or $4 per megawatt hour generated for sale.

Damrow said his proposed plan is a county-levied tax with 40 percent of the revenue going to the county general fund, 40 percent to the township general fund and 20 percent divided among the host county public schools.

He said with his plan, a township with 50 commercial 1 to 3 megawatt generator wind turbines would see a minimum payment of $482,000 annually to its general fund, and the same amount would be paid to the county general fund – which is much more than the $239,739 that Huron County Treasurer Sherry Learman said was distributed among all the local host townships in 2011. The county received $387,837 last year.

Huron County commissioners earlier this month approved a resolution supporting Damrow’s proposed legislation. Last week, county commissioners who attended a Michigan House Committee on Tax Policy hearing about the proposed legislation reported local officials definitely got through to the lawmakers. Commissioner Steve Vaughan was very positive that, by the end of the hearing, the officials had the committee’s undivided attention and they knew the local government officials are very serious about this issue.

Damrow said he expects to be before the tax committee for a second hearing within the next couple of weeks.

“I’ve got a pretty good feeling about this that we will be able to move forward with it,” he said, noting he expects to meet with wind developers Friday to get feedback from them about what they think about the House bills.

Also, he’s been working with lawmakers from other parts of the state that are experiencing wind development. He said he wants them to understand how important it is to be involved now in getting tax revenue from wind developments locked in for the future.