The writer, of Ogallala, Neb., is a state senator. He represents District 47 in the Nebraska Legislature.
Aside from our people and our water, wind might be our state's greatest natural resource. The generation and sale of electricity from Nebraska wind is a once-in-a-lifetime opportunity, but our state is currently at a competitive disadvantage in this rapidly changing market.
It is incumbent on the Legislature to provide a level playing field for our citizens and businesses to compete and prosper. Legislative Bill 402, introduced by Sen. Heath Mello of Omaha, would do just that — and provide tax relief for Nebraska's citizens.
Most of our rural counties are losing population, and many suffer from strained budgets and high property taxes. Wind energy development brings jobs, economic opportunities and capital investment in the hundreds of millions of dollars to rural areas. For rural parts of our state to sustain themselves, we must repopulate or repower.
Wind energy projects allow us to export our property tax obligations. Specifically, wind energy development can substantially increase a county's property tax base through nameplate capacity taxes on wind farms. This in turn allows the county to either lower its property tax levy, improve services or capital facilities or do both.
Therefore, a substantial wind farm in a sparsely populated county could decrease its property taxes by 20 percent to 50 percent. This provides substantial property tax relief to the average Nebraskan, and it supports our schools and our local governments across the state in providing essential services to their constituents.
Unfortunately, Nebraska lags behind our neighbors when it comes to wind energy development. Our wind is as good as anybody's, and our public power districts continue to improve our transmission systems. But we charge sales tax on the inputs to a wind energy facility, such as towers, turbines and blades. Most of our neighbors do not.
The one exception is our Community-Based Energy Development, or C-BED, statute. This law, which the Legislature enacted in 2007, exempts from sales tax any wind energy project in which 33 percent or more of the project revenues flow to Nebraska residents.
This is a great concept not only because it encourages wind energy development but also because it ensures that these projects create wealth in Nebraska and among Nebraskans.
LB 402 would improve on existing C-BED laws by broadening the means by which a project could qualify for exemption from sales taxes. The bill also would allow purchase of products and services from Nebraska to count toward the C-BED qualification requirements, in addition to local investment. This would make the exemption more accessible and a better incentive for wind energy development.
The bill also would support the growth and development of industries and businesses in Nebraska that provide the products and services to a wind energy facility.
In many cases, these beneficiaries will be small businesses, owned and operated by Nebraskans. These businesses will sell their products and services to wind energy projects outside of Nebraska as well, thereby creating another medium for export, and for importing capital from other states to help grow our economy and support our residents.
This creates sustainable and permanent economic growth and development. It also ensures that Nebraska and its citizens are true partners in wind energy development.
In a Nebraska wind energy facility, one dollar of foregone sales tax will result in as much as six dollars in property tax relief and landowner payments.
LB 402 would substantially increase this benefit. The bill would remove a barrier to wind energy, especially wind energy for export, but it also would promote development of supporting industries and result in broad economic development in the state. In terms of “bang for the buck,” this approach is excellent.
I support additional wind energy development in Nebraska because I support economic development and fiscal sustainability, especially in our rural counties. Wind energy development represents a tremendous opportunity in this regard. Wind energy development also provides a hedge against future electric rate increases resulting from increases in fuel or regulatory costs for other sources of electricity.
LB 402 would encourage investment of many kinds in rural Nebraska, increase the vitality of our agricultural industry through diversification, create real wealth across our state, lower our property taxes and wisely use and protect our valuable natural resources.
This bill would improve our state's ability to be a major participant in the wind energy market and simultaneously provide tax relief to Nebraskans.