As debate looms on legislation that could lead to Nebraska getting a $300 million wind farm, Republican Gov. Dave Heineman reiterated his opposition Monday to the tax breaks that could pave the way for the project.
A bill (LB104) by Omaha Sen. Steve Lathrop would remove a barrier to the development and export of wind energy in Nebraska.
The measure would provide a sales tax exemption for the purchase of turbines, towers and other wind-farm components – which Iowa, Kansas and Oklahoma have used to create a wind-energy boom. Meanwhile, Nebraska has lagged behind, ranking 26th of the 39 states that generate wind energy, despite having the fourth-best wind resources in the country.
Lathrop said Nebraska could gain a $300 million to $400 million project – by TradeWind Energy of Lenexa, Kan., if his bill is passed. The project would fall under the Nebraska Advantage Act, which was passed in 2005 and is meant to encourage companies to expand and create jobs by offering them tax incentives.
To date, some 320 companies have applied for Nebraska Advantage credits and created 20,500 new jobs.
But Heineman said he opposes Lathrop’s measure because the Legislature is preparing to study how best to overhaul Nebraska’s tax system.
“I’ve made it very clear that Nebraskans deserve tax relief first … before you ought to be considering a bill like that, and especially providing special tax breaks for a Kansas company so they can ship Nebraska energy” out of state, Heineman said during a conference call with reporters. “You ought to ask him why that makes sense.”
Nebraska lags in the production of wind energy. Iowa, for example, generates more than 13 times as much wind power as Nebraska – 4,536 megawatts to 337. And Nebraska ranks last among its neighboring states.
Proponents of LB104 said the state needs to act now if it wants to develop its abundant wind resources, because a major wind-energy incentive – a federal production tax credit – is scheduled to expire at the end of the year.
The bill earlier advanced to second-round of debate on a 30-0 vote. Lawmakers are expected to take it up again this week.
TradeWind Energy’s Rattlesnake Creek Wind project would be in Dixon County. Lathrop said the 200-megawatt wind farm would provide lease payments to local landowners of $10,000 to $15,000 per turbine, create 200 construction jobs and 12 to 16 permanent jobs, and pay $700,000 a year in local taxes. With the bill, Nebraska could allow a refund of sales tax to qualifying companies. It was expected that in the next two-year budget, tax refunds could equal about $7.5 million.
TradeWind Energy will decide soon whether it will build in Nebraska or elsewhere.
Lathrop noted that Heineman has been a major proponent of the Advantage Act.
“It is like so many additions to the Advantage Act … which is all about economic development,” Lathrop said. “Most of the Advantage Act … is intended to incent outside businesses to come to Nebraska. So it’s doing exactly what we’ve done a million times, and I think he’s probably supported every one of them.”
Another wind energy bill (LB402), by Omaha Sen. Heath Mello, would encourage more local ownership of renewable energy projects. It would allow a sales tax exemption on materials used in the projects, as long as 25 percent of gross revenues go to Nebraska businesses or individuals.
Some groups, like the Nebraska Farmers Union and Center for Rural Affairs, have said they support LB402 because it would create more economic development in rural areas by requiring purchases from Nebraska to qualify for tax breaks. The Sierra Club supports both bills.
Mello has asked that his bill be held over until next year.
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