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Nebraska Supreme Court reverses lower decision on tax credits for wind farm

LINCOLN – The Nebraska Supreme Court reversed a lower court ruling Friday that had struck down property tax credits for a Knox County wind farm.

The high court determined that a 2010 state law intended to encourage wind farm development in Nebraska did not violate the constitution.

The law replaced personal property tax on wind farm equipment with a tax on the megawatt capacity of the facilities. The replacement tax is called a nameplate capacity tax, and it helps spread out the upfront costs of building the farms over a longer period of time.

The nameplate capacity tax applies only to privately developed wind farms.

When the law took effect, Elkhorn Ridge Wind Farm near Bloomfield was the state’s only facility in private ownership. In 2009, Elkhorn Ridge paid $1.6 million in personal property tax.

So lawmakers included a provision in the 2010 law to give Elkhorn Ridge credits for future nameplate capacity taxes. Senators decided that it would be unfair to the business to have to pay both property tax and the new capacity tax.

The Knox County Board of Supervisors sued Gov. Dave Heineman and other state officials over the new law.

Last year, Lancaster County District Judge Paul Merritt Jr. struck down the credits for Elkhorn Ridge as an unconstitutional “commutation” of property taxes.

The high court disagreed, saying the nameplate capacity tax substituted for property taxes, it didn’t eliminate them. In addition, the high court ruled the 2010 law did not constitute special legislation, and it ordered the lawsuit dismissed.

The Attorney General’s Office represented the state in the matter. Omaha attorney David Domina represented the county supervisors.