LINCOLN – Nebraska, an also-ran so far in the race to develop wind energy, took another step Wednesday to try to catch up with the pack.
On a 38-2 vote, state lawmakers gave final approval to a bill granting sales tax breaks to wind farms. Proponents said the measure would make the state competitive for projects that are now going to Iowa, Kansas and Oklahoma, where such breaks are already offered.
Passage of the wind measure, Legislative Bill 104, sets up a potential fight with Gov. Dave Heineman, who has pledged to veto the bill.
The governor has objected because the bill is primarily aimed at persuading a Kansas company, TradeWind Energy, to build a $300 million wind farm near Allen, in northeast Nebraska. The governor has said that Nebraska families deserve tax breaks first, not out-of-state companies.
But that veto pledge may be complicated by an amendment tacked onto the bill at the urging of State Sen. Ernie Chambers of Omaha. That clause rescinds Omaha’s authority to impose an extra half-cent of local sales taxes, something Heineman has supported.
So it leaves the governor in a difficult spot – whether to fulfill his veto promise or let the bill become law because it includes something he likes.
The governor, at a press conference on a different topic Wednesday afternoon, declined to comment on what he might do.
It would take 30 votes for lawmakers to override a veto, and the 38 votes in support of LB 104 suggest Heineman would have difficulty making a veto stick.
Omaha elected officials have not sought to increase the local sales tax, which would require a vote of the people. And Mayor-elect Jean Stothert has said she had no plans to seek an increase.
Barry Kennedy, a representative of the Nebraska Chamber of Commerce and Industry, said he hoped that Heineman would allow LB 104 to become law since he has supported wind energy in the past.
“Hopefully, he’ll take that into consideration,” Kennedy said.
Nebraska ranks 26th nationally in the generation of wind energy and last among its neighboring states, despite having the fourth-best wind resources in the country.
Iowa has the seventh-best wind resources. But the state generates more than 13 times as much wind power as Nebraska and ranks No. 3 nationally in wind-energy generation.
Other states, backers of LB 104 say, have out-flanked Nebraska in granting better incentives to build wind farms.
“The race is on … and we’re still lacing up our shoes. If we don’t get in the race soon, the race will be over,” said Sen. Ken Haar of Malcolm, a leading proponent of wind energy.
The main sponsors of the wind bill, Omaha Sen. Steve Lathrop and Kearney Sen. Galen Hadley, argued that Nebraska has lagged behind in the wind-energy race because it has not matched sales tax breaks on wind farm materials that have been offered by states such as Iowa, Kansas and Oklahoma.
“Wind-energy development will take off under LB 104,” said Lathrop.
A lobbyist for TradeWind, Natalie Peetz of Lincoln, said passage of LB 104 will send an important message that Nebraska is serious about attracting more wind farms.
Under the bill, renewable energy projects that invest more than $20 million would qualify for sales tax refunds on purchases of materials and equipment under the state’s main business-development law, the Advantage Act. Not only wind projects but solar, geothermal, hydroelectric, biomass and cold fusion projects also would qualify.
The bill survived a last-minute attempt by Ogallala Sen. Ken Schilz to amend another wind bill, LB 402, into it.
Schilz argued that LB 402 would provide more economic development for the state by requiring a wind developer to invest at least 10 percent of its project cost in Nebraska “inputs” to obtain a tax break. Such inputs include lease payments to farmers and the hiring of local firms for engineering and construction.
The Legislature also passed another tax break measure on Wednesday. LB 308 would rescind the state’s alternative minimum tax and allow businesses to spread out operating losses on their tax bills over 20 years instead of the current five years.
The state’s business groups, including the state chamber, have supported LB 308 as a way to streamline state taxes and improve the state’s ranking for its business tax climate.