If any place was going to be a good for using wind to produce electricity, it would be Oklahoma. The famous Broadway lyric, after all, says the state is “where the wind comes sweeping down the plain.”
Broadway got that one right. Thanks to a program of tax credits, Oklahoma today ranks third in the nation in wind energy generation, behind only Texas and Iowa.
The state has 3,394 wind turbines that produce enough electricity to power 1.8 million homes. Wind energy produces about 25 percent of the electricity generated in the state.
The wind industry has invested more than $12 billion in the state, creating an estimated 9,000 jobs and paying $134 million in property taxes over 13 years.
Those are all impressive numbers. But they are trumped by this: State officials, facing an $868 million budget hole, have decided they can no longer afford to be so generous.
This week, Oklahoma’s governor signed a bill that ends a 10-year tax credit for companies who produced electricity through “zero emission facilities” like wind turbines. The change in the law won’t fully eliminate the tax break until 2027, and the state estimates that credits in the program this year will total up to $120 million — about one-seventh of the Oklahoma budget hole.
There is little doubt that the tax credit, which started in 2003, played a major role in placing Oklahoma third in the nation in wind-generated electricity production. The question is whether the cost of the credits was worth it.
Industry officials say Oklahoma will remain an attractive place to build turbines even without the tax credit. They noted that electricity producers have made large investments in other states that don’t offer the credits, like Texas and Kansas.
Going back to Broadway again, if Oklahoma is really where the wind comes sweeping down the plain, it follows that electricity producers would have wound up in the state anyway. Why give them a tax break? Did the state sacrifice too much revenue for a $12 billion investment and 9,000 jobs?
It turns out that Oklahoma has been awfully generous to plenty of businesses over the years. The Associated Press reports that the state provides about $1 billion worth of tax breaks per year. A state Renewable Energy Council member groused that removing generous subsidies to the oil and gas industry would bring in more money now, not in 10 years.
Yes, businesses need and often deserve some sort of tax assistance to encourage investment. But it’s pretty clear that one reason Oklahoma’s budget is in trouble is because the state hasn’t made some industries pay their fair share of taxes.
There’s a lesson in here for Mississippi, whose leaders also make a big deal out of zillion-dollar giveaways to new industries. States who admittedly are desperate to create new jobs must be careful not to give away too much.
Jack Ryan, Enterprise-Journal