Frank Robson: Time for Big Wind to pay up for the state’s budget hole

A simple majority vote on two excessive wind subsidy programs would help solve Oklahoma’s budget crisis

The lack of progress in the special session has made it apparent that Oklahoma lawmakers are struggling with how to fund the significant gap in our state budget. However, any proposed tax increase requires approval of 75 percent of both houses of the Oklahoma Legislature, nearly an impossible feat in today’s political climate. Yet, we’re overlooking a much simpler solution. The state could potentially generate more than $120 million annually through a simple majority vote of the Legislature to change two wind subsidy programs.

An estimated $20 million annually, according to Oklahoma Tax Commission figures, could be collected in sales tax revenue if lawmakers repealed the sales tax exemption for wind developments. Because wind production facilities remain exempt from paying sales taxes, Oklahoma and the counties where the projects are located will not collect millions that could fund core services.

Another $100 million annually could be saved if the Legislature instituted an annual cap on what Oklahomans pay for yet-to-be earned Zero Emission Tax subsidies. Although any new projects no longer qualify for the credit, taxpayers are still required to pay subsidies for 10 years from first commercial operation on wind generation facilities that commenced operations before July 1, 2017. Year-to-date electricity production from wind for 2017 suggests that we will pay more than $112 million in tax credits for the 2017 tax year. If we implemented a $12.5 million cap — the amount established for economically at-risk oil and gas wells — we could generate $100 million in savings. Without a cap, the total over the next 10 years will exceed $930 million.

Although changing property tax policy requires more than a simple majority vote, it’s important to note that Oklahomans also continue to pay property taxes for the first five years on wind developments completed before Dec. 31, 2016. Last year, the Legislature had to take $60 million out of Oklahoma’s savings account — the constitutional “rainy day” fund — to make up for the property tax for wind. This program continues through 2021 and will cost taxpayers an additional $300 million. If we eliminated sales tax exemptions and capped zero emissions tax credits, the industry would still be paid this subsidy. Read More