Oklahoma budget writers are targeting another wind incentive as part of their solution to close an almost $900 million budget gap for the upcoming fiscal year.
A Senate proposal earlier this week included elimination of the manufacturer’s sales tax exemption for wind equipment. Ending the exemption could bring in an extra $16 million in revenue for fiscal year 2018.
The manufacturer’s sales tax exemption covers a broad range of industries and amounted to more than $2 billion from 2015 to 2016, according to the latest Oklahoma Tax Commission tax expenditure report.
Qualified manufacturers have to apply for a sales tax exemption permit, which must be renewed every three years. The exemption covers purchases of machinery, equipment and energy used in design, development and manufacturing.
House Bill 2360 would end the sales tax exemption for wind “manufacturing,” bringing it in line with oil field equipment, which is not eligible for the manufacturing sales tax exemption.
However, the sales tax exemption does cover equipment used in oil refineries or power plants. Brian Alford, a spokesman for Oklahoma Gas and Electric Co., said the utility has a manufacturing sales tax exemption for equipment used to upgrade its Mustang natural gas plant at the western edge of Oklahoma City.
The Windfall Coalition, a group founded by some oil and gas executives, has made eliminating the manufacturing sales tax exemption the latest part of its continued campaign against wind incentives.
Representatives of the wind industry said the manufacturer’s sales tax exemption for wind plays a key economic role, especially as lawmakers have phased out other incentives for the wind industry.
“It helps attract investment,” said Jeff Clark, president of The Wind Coalition, a regional trade group. “That’s why most other states offer the same exemption to many industries. This proposal is shortsighted and harms the long-term prospects of the Oklahoma economy. It’s just another anti-investment, anti-growth proposal pushed by anti-wind groups, and it’s one that the legislature should reject.”
Earlier this session, Gov. Mary Fallin signed House Bill 2298, which ends the zero-emissions tax credit for new wind projects July 1. Wind farms operational before that date will still be able to qualify for the incentive, which can be carried forward up to 10 years.