In the next four years, Oklahoma taxpayers will be asked to subsidize tens of millions of dollars in reimbursements to local entities like schools and counties, not because these are broke, but because of an ill-conceived tax credit involving wind farms that many residents question.
The state’s property tax reimbursement program was designed for a valid purpose: to assist schools and counties in dealing with an upsurge in population resulting from new jobs. If a manufacturer built a factory in a rural area and boosted employment, he would receive a five-year exemption from property taxes.
In return, the state treasury would reimburse those local entities for that lost revenue, which they would need to serve those new residents.
Under that system, everybody won. The county got new jobs, expanded its population and ultimately had a larger tax base to fund schools and other necessities. State government received more sales and income taxes to fund essential government services. The manufacturer would get a higher return on investment up front, making the decision to locate there a smart one.
Then came the wind farms and other entities that produced few, if any, jobs. In the early 2000s, legislation made them eligible for the same five-year property tax exemption. Last year, Oklahoma taxpayers ponied up $32 million in reimbursement payments to counties derived from wind farms alone.
The current estimate is that we’ll shell out another $290 million to subsidize wind farms by 2018, from property tax reimbursements and additional subsidies under the zero-emission tax credit system. Some $76 million of that will be in property tax reimbursements in one year alone. Those reimbursement payments are funded from individual and corporate income tax revenues, which means taxpayers in my district are paying their own property taxes and those in other counties as well.
In some cases these payments are simply a boondoggle. Last year we reimbursed Roger Mills County more than $6 million, about $1,700 for every person living there.
What’s wrong with giving wind farms the same tax breaks manufacturers receive? Wind farms produce few, if any, long-term jobs. Once the farms are built, the companies move on to the next project. With no extra jobs being created, there is no reason for state taxpayers to reimburse costs that don’t exist.
Second, many Oklahoma wind farms sell the power they generate out of state. They’re selling the power they produce, with our generous subsidies, to agencies like the Tennessee Valley Authority.
Texas is also a wind farm mecca, but it doesn’t saddle taxpayers with wasteful subsidies. In Texas, local entities are allowed to negotiate tax breaks, but the state doesn’t offer a reimbursement program like ours.
With many communities questioning the wisdom of wind farm development, it makes little sense to spend so much on taxpayer-funded subsidies that bring few, if any, returns.
It’s time to end tax reimbursement programs for projects that don’t create jobs or add to our prosperity.
Dank, R-Oklahoma City, represents District 85 in the Oklahoma House.
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