OKLAHOMA CITY – Lawmakers faced off Wednesday as they narrowly voted to curtail a controversial and costly wind credit touted for spurring wind development and economic growth across western Oklahoma.
In an effort to encourage economic growth, the state has long offered wind farms operational by July 2017 an incentive, known as zero-emission tax credits, for the first 10 years of a farm’s operation. Companies currently use it to lower tax payments, then cash in unused credits.
The vote Wednesday would forbid companies from cashing in unused credits in an effort to save the state millions of dollars in future budget years. The measure still needs to pass the Senate.
But wind developers said they’ve tied their financing to the promised credit. If lawmakers renege on their deal, they say, it could jeopardize not only the survival of developments, but also finances of area school districts whose fortunes are tied to the success of wind farms and the property taxes they pay.
Wind developers have threated to sue if it becomes law.
“It almost seems like we’ve ended these, and we’re punishing ourselves, and, to be honest, the people in my district and the schools in my district because these programs were successful,” said state Rep. John Pfeiffer, R-Orlando.
But critics of incentives said when lawmakers launched them in the 1990s under then-Gov. Frank Keating, they only expected the industry to claim a few million dollars a year. They argued the state can no longer afford the expensive subsidy, which they said is costing taxpayers more than $70 million annually.
“It’s time that we stop being a sugar daddy for wind,” said state Rep. Bobby Cleveland, R-Slaughterville.
He said when he looks at how much Oklahoma taxpayers are subsidizing out-of-state developers, “it makes me madder than a bull in a peach orchard.”
Several lawmakers said they feared canceling an agreed-upon incentive now that wind decided to invest. Reneging on the deal would have a chilling effect on Oklahoma communities’ efforts to attract new industries and diversify their economies.
“(The industry will) say, ‘Well, don’t go to Oklahoma. (Lawmakers) will change the contract after you’ve signed it. We’ll litigate, and we’ll win, but I mean you can’t trust those guys,’” said state Rep. Leslie Osborn, R-Mustang. “What’s our argument to that?”
She also said she fears the Legislature would lose if sued because she said officials have signed binding contracts that obligate them to honor the credits.
State Rep. Jeff Coody, R-Grandfield, who authored the measure, said the companies will continue to do business here. He said he’s not scared of legal threats or concerned that wind developers will go into default or abandon their developments.
“That’s really what you’re throwing out there is the scare tactics that all these companies would run, turn tail and leave the state of Oklahoma,” he said. “The legal burden is minuscule compared to the amount of savings that we could gain in the state of Oklahoma by curtailing this very lucrative and very expensive program that gets very little in return for Oklahoma’s taxpayers.”
State Rep. Mark Lepak, R-Claremore, who supported the curtailing the credit, said he disputes the notion the industry hasn’t created Oklahoma jobs.
He cited a Claremore company that manufactures components used in transmission lines and turbines and employs hundreds of people.
State Rep. Matt Meredith, D-Tahlequah, meanwhile, blamed the measure on the state’s influential oil and gas interests. He said there are better ways to tax the industry, including by charging a gross production tax on the energy produced by the turbines.
“That’s who runs this building is the oil and gas,” he said. “I think it’s time to stop giving in to oil and gas and start doing what’s right and not have this bill on the floor. Let’s do something that will be sustainable in the future.”
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