A major tax break for new wind power plants would be eliminated under a bill approved Thursday in the Oklahoma House.
Under Senate Bill 498, the state would no longer offer a five-year property tax exemption for new wind energy developments. Existing wind facilities would keep the exemption.
The version of the legislation approved on Thursday in the House has an effective date of Dec. 31, 2016. The Senate earlier passed a version of the bill with a Jan. 1, 2016, effective date. It now will consider the House version.
Sen. Mike Mazzei, R-Tulsa, one of the authors of the bill, said the legislation is needed because Oklahoma tax incentives for the wind power industry have grown more rapidly than intended.
Meanwhile, the state is facing a budget shortfall of $611 million.
In addition to the property tax exemption, tax credits are provided to wind power companies based on how much energy they produce.
Together, these two economic development incentives are expected to grow to more than $100 million a year as the wind power industry continues to expand in Oklahoma, Mazzei said. Oklahoma’s wind power capacity has reached more than 3,780 megawatts, ranking it No. 4 nationally.
“It’s becoming a cost item we can’t really afford,” Mazzei said.
He said there could be an additional $20 million in yearly costs to the state budget simply by having the law take effect Dec. 31, 2016, rather than Jan. 1, 2016.
“We need to be precise to make sure costs don’t explode,” he said.
He said there are 29 wind power facilities in Oklahoma and another 10 that will be built by Jan. 1. If the bill were to take effect a year later, there would be another four to six plants now in the planning stages that would get the tax incentives.
Rep. Earl Sears, R-Bartlesville, the House author of the bill, said he prefers the later effective date in order to protect companies that are planning new facilities based on the existing law and already have permits and business plans.
“And I do not want to be part of jerking that out from underneath them,” he said.
Even though this could cost the state more money in the short run, he said, ultimately the state would be out of the business of providing property tax exemptions to the wind industry.
Jeffrey Clark, executive director of The Wind Coalition, said the earlier date would be detrimental to businesses, investors and local communities.
“We feel the later date is a fair date, a compromise date,” he said. “We think it’s a reasonable compromise. We don’t love it. The best compromise is when everyone leaves the table not entirely happy. That’s usually a sign you’ve brokered a good compromise.”
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