The Oklahoma Senate voted Friday to end a five-year property tax exemption for new wind developers on Jan. 1, 2017.
Senate Bill 498 passed by a vote of 37-0. It now goes to Gov. Mary Fallin for her approval.
Sen. Mike Mazzei, R-Tulsa, said the measure could save $500 million over the next 10 years. Exemptions by wind developers made up half of the $64 million in claims in 2013, according to the Oklahoma Tax Commission.
“This incentive was first enacted when Oklahoma was trying to encourage the development of wind farms and jobs that would be created as a result,” Mazzei said in a news release. “But now that tax incentive is costing our state $44 million a year, and without adjustments it could easily double. Given our current fiscal reality, the need for reform was clear.”
Tax Commission projections for the property tax exemption for wind developers estimated $28.8 million in claims for 2014, $38.2 million for 2015 and $44.9 million for 2016.
The bill’s House sponsor, Rep. Earl Sears, R-Bartlesville, said its approval will reduce tax incentives but still keep the state competitive for wind development.
The Wind Coalition, which represents wind developers, manufacturers and customers, said the industry realized the rising cost of the incentive on future state budgets and worked with lawmakers to craft a deal.
Oklahoma faces a $611 million revenue shortfall for fiscal year 2016.
“To assist the state budget deficit, the wind industry conceded the full, 100-percent elimination of the five-year ad valorem exemption beginning Jan. 1, 2017,” said Jeff Clark, the coalition’s executive director.
Another incentive for the wind industry, the zero-emissions tax credit, will remain in place and has a sunset date in 2021. That incentive allows for a 0.5 cent per kilowatt hour tax credit for electricity generated from wind and other renewable sources. More than $17.6 million was claimed under the credit in 2013.
Lawmakers earlier voted to end the New Jobs/Investment Tax Credit, which is available to wind developers but has been rarely used.
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