The battle over tax incentives for wind farms in Oklahoma has moved into campaign mode, with robocalls being made and direct mail sent to some voters in an effort to get them to sway their elected officials.
Negotiations continue at the Capitol over incentives for the wind industry. Bills dealing with two of the three incentives are on the Senate floor and could come up for consideration as soon as next week. Another bill addressing the zero-emissions tax credit, House Bill 1554, is dormant for this session.
WindWaste, a group funded by Claremore businessman Frank Robson and the Oklahoma Property Rights Association, sent out postcards to voters last week claiming “foreign-owned wind farms are breaking Oklahoma’s budget.” A robocall mentions the word “foreign” five times in the 40-second recording.
That was countered by mail sent this week to voters in 11 legislative districts by an industry group, The Wind Coalition. The postcard warned of negative scare tactics and political rhetoric being floated by “anti-business development and anti-property rights activists.” It features quotes from a school superintendent and a county assessor.
House lawmakers last week approved an amended Senate Bill 498, which would end a five-year ad valorem property tax exemption for new wind developments by Dec. 31, 2016. The bill’s Senate author, Sen. Mike Mazzei, R-Tulsa, prefers an earlier ending date of Jan. 1, 2016. SB 498 is back in the Senate for approval of the House amendments.
Meanwhile, Senate Bill 502 by Sen. Marty Quinn, R-Claremore, could be sent to a conference committee after concerns were raised about its effective date. In its current form, the bill would end the New Jobs/Investment Tax Credit for new wind developers by Jan. 1, 2017.
Rick Mosier, with the Oklahoma Property Rights Association, said his group sent mailers and made calls because it wanted to educate voters on the costs of the wind tax breaks on the state budget.
“We’ve found that people are very interested in the level and the cost and what that might mean to the state budget,” Mosier said. “It is an extraordinary largesse, and we need to cut it back.”
In its mailer, WindWaste said the state could be on the hook for up to $193 million annually in wind incentives if all the projects in the planning stages were built. That figure assumes nothing would be done to reform the current wind incentives.
Jeff Clark, executive director for The Wind Coalition, called the WindWaste estimates an extreme exaggeration. He said the state has granted about $120 million in wind incentives over the past decade.
The Oklahoma Tax Commission prepared estimates in January for the five-year property tax exemption and the zero-emissions tax credit available for wind developers. Based on its projections – which assume no changes to current law – the total amount for both incentives is $333 million from 2014 to 2018. That’s about $66 million per year.
Clark said the wind industry understands the Legislature’s concerns about business incentives and has worked to cut back on those available for wind developers while keeping the state competitive with Texas and Kansas. He criticized WindWaste’s focus on the cost of the incentives and not the benefits, which include cheaper electricity for utility customers, additional property tax revenue to schools and royalty payments to landowners.
“The bottom line is it just sounds scary,” Clark said. “They’re saying foreign-owned industries are going to take all your money and your kids aren’t going to get an education.”
The state has more than 30 wind farms in commercial operation. Some of them are owned by the U.S. subsidiaries of companies from Italy, Spain, Portugal and the United Kingdom. But a U.S. company, NextEra Energy Inc., owns 10 projects in Oklahoma.
Mosier said the industry touts a 10-year capital investment in Oklahoma of more than $6 billion, but only a fraction of that went to Oklahoma companies and residents. He said The Wind Coalition has personalized the issue and attacked Robson for pushing to reform the incentives.
“We’re interested in taking a look at tax incentives that are very costly to the state budget and have the possibility of becoming even more costly to the state budget,” Mosier said. “Many legislators have told us we adopt these things and then nobody ever goes back and looks at them.”
The Tax Commission said wind developers claimed about $32 million in ad valorem tax exemptions in 2013. The five-year property tax exemption is available for wind developers, large manufacturers and data centers. The state reimburses local authorities for the exemption, with the reimbursements coming from the first 1 percent of state income tax collections.
Clark said critics of the property-tax exemption don’t take into account that wind developers pay property taxes after the exemption ends. Most wind developers sign contracts with utilities for 20 or 25 years.
“If all you talk about is the first five years, then no incentive sounds good,” Clark said. “When you look at the life of the project, it has tremendous payout for Oklahoma.”
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