While it wasn’t the biggest reason for Oklahoma’s budget woes, state officials said revenue was hurt by an unexpected claim on wind tax credits.
Part of a 15 percent fall in tax revenue last month was because energy producers outside the oil and gas industry claimed $24.5 million worth of energy tax credits. The industries include wind production and coal, The Journal Record's Dale Denwalt reports:
“One of the reasons November was so negative (is) there was a huge, unexpected increase in the cost of wind incentives,” [Office of Management and Enterprise Services] spokesman John Estus said during an impromptu briefing with reporters after the revenue failure was announced. “Those things can add up, but they wouldn’t seem as profound if not for a 70-percent decrease in the price of oil.”
Estus said the state received no corporate income tax revenue in November, which he said isn’t unusual because of the unpredictability of when businesses will or can claim incentives.
In an email between OMES and the Oklahoma Tax Commission, one official expressed surprise at the nearly $50 million in corporate income tax rebates that were claimed in November, writing that the figure was three times higher than at the same time last year.
Officials announced a revenue failure after reviewing November tax figures. The revenue failure will lead to automatic spending cuts to fill a gap mostly caused by low oil prices.
The Wind Coalition Executive Director Jeff Clark told Denwalt wind incentives are just a small part of the overall state budget:
Clark said that despite the percentage of the budget devoted to wind energy incentives, a study produced by the State Chamber of Oklahoma found that wind could generate $1 billion in local revenue over the life of the farms.
“We’re talking about projects that would not have otherwise come to Oklahoma, and so those incentives are bringing economic activity, especially when we’re going through an economic crisis that’s driven in large part by the collapse in the price of oil,” Clark said. “So you have an energy industry that’s investing in the state to the tune of billions of dollars. That’s something we’ve got to continue encouraging.”
Wind tax credits are expected to increase until the incentive program ends in 2017.
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