LINCOLN — Advocates for wind energy urged state lawmakers Thursday to grant a sales tax exemption on wind turbines and other equipment to make Nebraska more competitive for new wind farms.
Nebraska is falling behind neighboring states, they said, because it does not offer exemptions on the purchases of turbines, towers and other wind-farm equipment.
That, a legislative panel was told, adds another $1.2 million a year in financing costs on a midsize wind farm and has forced investors to go elsewhere.
“We may not have coal or oil, or even beaches, but we do have wind, and I believe we should do everything we can to develop it,” said State Sen. Steve Lathrop of Omaha.
Lathrop and Sen. Galen Hadley of Kearney both introduced bills to provide sales tax exemptions for wind-farm equipment.
Lathrop's proposal, Legislative Bill 104, goes a step further by requiring wind farms to show at least 25 percent of their investment was from Nebraska “inputs,” such as employee stock ownership, lease payments or locally produced equipment, to qualify for a 100 percent exemption.
Both measures call for a new sales tax exemption at a time when Gov. Dave Heineman has said the state may have gone too far in granting such tax breaks, which now total about $5 billion.
But Hadley, the chairman of the Legislature's Revenue Committee, said Thursday that a sales tax exemption for wind farms is the kind of “targeted” tax break that is effective in increasing business activity.
“This is a good example of what a modernized tax system looks like,” the senator said of his proposal, LB 501.
Derek Sunderman of TradeWind Energy of Lenexa, Kan., said that his company may abandon a planned 118-turbine wind farm near Allen, in northeast Nebraska, because it is less expensive to build a similar project in Kansas, Oklahoma or Iowa, states that offer sales tax exemptions.
Sunderman estimated that Nebraska could see 10 new 100-megawatt wind farms and $1.7 billion in investment if it adopted similar tax breaks.
Similar proposals were introduced last year in the Nebraska Legislature but died before they could be debated. The Revenue Committee took no action on the two bills after a public hearing on Thursday.
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