Elected officials from four counties reacted Monday with alarm to a Senate bill imposing a property tax on renewable energy producers and retroactively undermining long-term financial agreements between wind power generators and county governments.
County commissioners from Kingman, Ellis, Grant and Sumner counties as well as a collection of wind-power companies and lobbyists said imposition of a 10-year cap on property tax exemptions for renewable energy would damage the rural Kansas economy.
Under current law, green energy companies have a lifetime exemption from school, municipal and state property tax.
Ellis County Commissioners Martha McClelland and Dean Haselhorst told members of the Senate Assessment and Taxation Committee the $250 million Buckeye Wind Project under construction in Ellis County would create temporary and permanent jobs, generate income for landowners and trigger voluntary payments from Invenergy to the county.
“The construction will employ 250 to 300 persons, which at this time is needed sorely because of the falling oil prices,” said McClelland, who owns land involved in the project. “Benefits to Ellis County will be jobs for people maintaining the wind turbines. Landowners will also benefit through increased income.”
However, Ellsworth County Commissioners Albert Oller, Kermit Rush and Terry Kueser signed on as proponents of the tax reform bill. They recommended renewable energy producers be subjected to a tax rate of 33 percent.
Repeal of the Kansas’ exemption with Senate Bill 257 would alter the business landscape for wind, solar, photovoltaic, biomass, hydropower, geothermal and landfill gas technology.
Kingman County Commissioner Carol Voran said assessment of property tax would deter expansion of wind farms and undermine “payment in lieu of taxes” received by counties from developers.
“Eliminating the exemption for wind farms would be devastating to the counties where they are located or where there is potential development,” Voran said.
Sen. Les Donovan, a Wichita Republican and chairman of the Senate tax committee, said the panel wouldn’t consider approving the bill until after new state tax revenue estimates are published in April. Based on November projections, the state government would have a $600 million deficit in the upcoming fiscal year. Budget cuts and tax increases are being considered by lawmakers.
Donovan said no other state offered renewable energy companies a permanent exemption from property taxes. There could be interest in amending the bill to apply property tax to future energy projects, he said.
He predicted the prevalence of wind in Kansas would convince companies to continue investing in the state even with tax adjustments.
“Don’t we have something they really need? It’s called wind,” Donovan said. “They go where they can get the wind. They’re not going away. We’re not going to put them out of business and run them out of the state.”
Wind Coalition lobbyist Kimberly Svaty told the Senate committee a 10-year exemption would jeopardize power-purchase agreements between wind farms and utility companies that stretch for 20 years.
Existing tax policy contributed to formation of an $8 billion industry and 13,000 jobs in Kansas, she said.
Svaty said Oklahoma and Nebraska were moving aggressively to attract wind farm developers away from Kansas. Oklahoma offers a property tax exemption and state production tax credit. Nebraska is working to implement a production tax credit.
“Kansas is in major competition with our neighbors to the north and south,” Svaty said. “Our neighbors are working to make their business climate favorable for additional wind development, jobs and associated investment. I am hopeful that Kansas does not fall behind.”
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