A federal tax break for wind power – a boon for the industry in blustery states such as Colorado – likely will stay on the books for another year despite opposition from conservative groups such as Americans for Prosperity and Heritage Action.
But supporters of the wind industry warned that Congress’ last-minute decision was hardly final and that the reprieve was more like a stay of execution than a full pardon.
“Unfortunately and sadly, it looks as if we have reached another low point in dysfunctional Washington politics,” said U.S. Sen. Michael Bennet, D-Colo., in a speech from the Senate floor.
Under legislation that passed the U.S. House on Wednesday, a write-off for wind energy was included as part of a $40 billion-plus package of more than 50 tax breaks and subsidies that lawmakers agreed to allow for the 2014 tax year.
Many of these breaks expired at the end of 2013. And for select companies – or even citizens – to take advantage of them in their 2014 tax filings, Congress must retroactively add the loopholes to the federal tax code.
This kind of cut-and-paste legislating is not new; in fact it’s almost a holiday tradition. Lawmakers must decide whether to renew a slate of these tax breaks, which often are called “tax extenders” because they must be “extended” on an annual or biennial basis, or else disappear.
Even so, Congress usually finds a way to pass the tax-extender package – as the combined might of K Street lobbying is enough to win the day.
But this year has been especially rocky. The bitter politics that followed President Barack Obama’s executive order on immigration torpedoed plans to do a long-term deal in Congress’ post-election session.
So Republican leaders in the House decided to punt the whole issue to next year and pass a one-year package of the tax breaks – a move supported by every House member of the Colorado delegation except U.S. Rep. Doug Lamborn, R-Colorado Springs, and Jared Polis, D-Boulder.
Senate Democrats still are holding out hope for a long-term deal, but with only days left in this current session of Congress, the chances of a breakthrough are slim.
And that has the wind industry worried.
As written, the tax break for wind energy gives the industry a credit of 2.3 cents per kilowatt-hour at wind farms for their first 10 years of operation. The incentive can add up quickly; the Joint Committee on Taxation estimates that the 10-year cost of the tax credit was worth nearly $6.4 billion.
Industry officials – who claim the $6.4 billion estimate is too high – said the tax break is critical for new wind farms, which need the initial financial boost to get going.
What’s more, they add, the House bill doesn’t help much because extending the tax credit through the end of the year gives wind energy companies less than a month to commence construction on new wind facilities – and thereby qualify for the federal tax credit.
“A three-week extension of the (wind tax credit) through only the end of 2014 would substantially limit wind energy investment in the United States,” warned lobbyists for the American Wind Energy Association in an e-mail to congressional staffers.
“An estimated 30,000 American workers would likely lose their jobs. Retroactive extensions do not stimulate new economic activity in an industry such as ours,” they added.
About 5,000 jobs in Colorado are tied to wind power, and the American Wind Energy Association estimates that almost 14 percent of the electricity generated in the state last year came from turbines.
A big chunk of the jobs in Colorado are through the multinational company Vestas, which produces turbine parts at four facilities in the state and employs about 2,000 people in manufacturing.
A Vestas spokesman declined to comment on the congressional negotiations, other than to voice broad support for the tax credit.
With Republicans set to take control of the Senate next year, there is concern among wind companies that conservative lawmakers specifically will target this tax break for elimination.
Already, there is opposition building on the right.
Activists with Americans for Prosperity, which is backed by billionaire industrialists Charles and David Koch, bought ads this year in states such as Florida, Texas and Ohio to persuade House members to cut it.
And on Wednesday the group warned that the House vote on the tax extender package would be included in its evaluation on whether to support lawmakers going forward – specifically because of its inclusion of the wind tax credit.
Despite the threat, at least one Colorado lawmaker who enjoyed AFP’s support in the election – incoming Republican Sen. Cory Gardner – voted in favor of the tax extender package and voiced support for the wind tax credit.
“The wind production tax credit is critical to Colorado’s growing renewable energy sector,” he said in a statement.
“While I support ramping the credit down over time, extending it now should be a top priority in the remaining days of this session of Congress.”
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