The full Senate has given final approval to legislation that will end the five-year ad valorem tax exemption for new wind farms beginning January 1, 2017. Senate Bill 498, by Sen. Mike Mazzei, R-Tulsa, and Rep. Earl Sears, R-Bartlesville, was approved unanimously on Friday. Mazzei said the bill will ultimately save approximately $500 million over ten years.
“This incentive was first enacted when Oklahoma was trying to encourage the development of wind farms and the jobs that would be created as a result. But now that tax incentive is costing our state $44 million a year, and without adjustments it could easily double,” Mazzei said. “Given our current fiscal reality, the need for reform was clear.”
Sears applauded representatives of the wind industry for their willingness to be a part of the process.
“The passage of this bill will help us in our journey in reducing tax credits on behalf of Oklahoma citizens,” Sears said. “The industry will continue to be competitive in our state as it moves forward in developing wind power energy.”
Lawmakers have been wrestling with a $611 million shortfall for the Fiscal Year 2016 budget, largely the result of off-the-top allocations for specific programs as well as increasingly costly tax incentives. Combined, these have reduced the amount of dollars available for appropriation for state services even though revenue collections have actually increased.
Other incentive reform measures have already been approved and signed into law this session. One will provide legislators with independent data on economic incentives, including estimated fiscal impacts and assessments of whether incentives are achieving their goals. Another requires that any economic incentive include a measurable goal or goals when enacted.
“Incentives can be an important part of an overall job creation effort, and I’ve supported their use through the years,” Mazzei said. “However, as stewards of these public resources, we must be willing to evaluate their effectiveness and make changes when needed to better serve our citizens and ensure critical services can be funded.”
SB 498 now goes to the governor for final consideration.