April 1, 2017
Oklahoma, Opinions

Frix: Ending an unsustainable credit

By Rep. Avery Frix | Muskogee Phoenix | March 31, 2017 | www.muskogeephoenix.com

The House voted recently to end the zero-emission, or wind, tax credit as of July 1. House Bill 2298 now is making its way through the state Senate.

By ending this credit in July as opposed to December, as had been suggested, the state stands to save up to $500 million over the next 10 years. At the same time, we keep our word to the wind industry – any project producing energy by July 1 still qualifies for the incentive.

When the tax credit was first signed into law in 2001, it was estimated the program would cost the state less than $2 million annually. The number of applicants, however, made the first payout in 2005 $2.7 million. That figure grew to $64 million by 2015. If the credit is not stopped, it is projected to cost the state $253.8 million by 2018. At the same time, the state pays ad valorem tax exemptions for the wind industry, costing the state an additional $38.2 million in 2015. These are estimated to cost $50 million by 2018. Wind companies qualify for other incentives as well, such as the investment tax credit and the manufacturer’s sales tax credit, and wind companies don’t pay production tax. Add to that the fact that the bulk of subsidized wind power – 93 percent – is going to out-of-state or foreign companies.

While this credit did allow the wind industry to get a major foothold in the state, offering an alternative energy source, it did not bring the number of jobs first promised. A U.S. Bureau of Labor Statistics report estimates only 253 wind technicians were employed in Oklahoma in 2014.

This program has been more than successful. Oklahoma is ranked third in the nation in net electricity generated by wind, but the industry is no longer in its infancy, and we are shipping most of the wind out of state.

Though the wind industry has more than 20 groups at the state Capitol lobbying to keep these credits in place, they simply are unsustainable and are not bringing a balanced return on investment. By picking up this tab, the state robs other core services such as education, transportation, public safety and health care. The state can no longer afford this type of industry bailout. With the current budget gap the state faces, it was past time to end this credit and to make sure we put better caps and regulations in place for any other future incentives.

If I can be of service to you, or you just want to share your ideas or concerns, please do not hesitate to contact me on my cell phone at (918) 680-1218.