OKLAHOMA CITY – It now will be up to Gov. Mary Fallin to decide whether a subsidy meant to help boost the state’s wind industry should keep churning.
With little fanfare Monday, the state Senate voted to end the subsidies, known as zero-emission tax credits, come July 1. The move mirrors a similar vote by the state’s House earlier this year.
“The tax credit was put in place to try to help the industry get off the ground and get going,” said Sen. Bryce Marlatt, R-Woodward, who backs ending the measure. “Obviously, with the success we’ve had and the amount of development we’ve had, it’s done its job and the tax credit’s not needed anymore.”
Wind farms already operational by the start of July still will be eligible to receive the incentive, which is offered to producers for the first 10 years of a wind farm’s operation. Companies use it to lower tax payments, then cash in unused credits.
Critics of the incentives say they’ve worked too well, ballooning out of control as the number of wind farms and their energy output have blown away predictions.
One reason is that Oklahoma, unlike other states, didn’t cap incentives for the industry. As a result, a state with no wind farms in 2002 now has 30, mostly in rural areas in western Oklahoma. Still more are on the drawing board.
In 2014, Oklahoma paid more than $59.7 million to wind producers – nearly triple what it paid two years prior. Wind producers, meanwhile, reported generating enough energy to have claimed as much as $113 million in the credit, though it’s unclear why they didn’t claim it all, according to Oklahoma Tax Commission.
Marlatt said it likely will take a decade before the state starts seeing savings from the credit’s elimination. But once it fully takes effect, he estimates it will save hundreds of millions of dollars. The state is currently facing an $878 million budget shortfall.
“Ending this is a fiscally responsible thing for the state moving forward,” he said.
If Fallin ultimately decides to veto the measure, the credits will expire in January 2021.
In a statement, Jeffrey Clark, president of The Wind Coalition, a trade association, said the credit was the lone remaining wind tax incentive. The credits helped bring in billions of dollars in private investment to rural areas, lowering electricity prices, creating new jobs and helping fill school coffers, he said.
“The incentives have served their purpose well and have helped Oklahoma bring much-needed diversification to its economy,” he said. “As an industry, we are proud that these incentives worked so well for the benefit of Oklahoma, but we recognize that, as an industry matures, incentives should be examined and adjusted to reflect that growth. We hope that other industries will recognize Oklahoma’s challenging fiscal situation and follow our lead.”
He said his coalition looks forward to working with state leaders to develop a plan to keep the state competitive for future investment.