We became concerned a few months ago when a media blitz started about the taxation patterns of wind farms (wind energy systems if you talk to industry people). We began to do research on the impact of wind energy systems in rural Oklahoma, and as our research developed, we discovered that the inequity to future Oklahoma districts and students due to a split in the depreciation schedule is going to be a major issue in a few years. Below is a brief summary of our findings. If you would like to view the study in its entirety, you can access it here.
The discussion of tax credits and other issues led us to continue our research.The short version of what we found is this:
- Wind energy systems do bring a substantial ad valorem benefit to a district.
- Depreciation on wind systems at the ninth year after installation begins to quickly erode the ad valorem values.
- The replacement of ad valorem with a gross production tax is fine, as long as it is used in addition to the ad valorem tax to stop the erosion of the ad valorem tax base.
- The wind energy systems are removing districts containing wind energy systems from the State Aid formula within two to three years or significantly reducing the amount of State Aid sent to the district, which benefits districts on State Aid.
- There is a concern about tax-exempt entities purchasing wind energy systems and removing the systems from the tax roll and causing undo hardships on district and state resources.
- Tax cuts need to be better considered prior to approving them.
This particular study was neither commissioned nor paid for by any group. We tried very hard to write this from a neutral standpoint between the petroleum industry and the wind industry and to look at the numbers that benefit districts, their students and their patrons. We do believe that the wind industry does add substantially to districts, but the tax concerns and the benefits to our students' futures are a major concern for OPSRC. The health of the rural districts, communities and counties and our Oklahoma way of life is of major concern to all of us.
The entirety of data included in this study is all based off of public source data and was taken off the SDE transparency page or the Form Data Sheets. We started with a very wide net of districts and moved downward as we looked for specific data sets that are indicative of large wind energy systems. Our primary focus wound up being Canadian County, Roger Mills County, Kiowa County and Woodward County. We are concerned there are many times when people say the descriptive words that a district is "off the formula," they believe districts have all the money in the world. We know that it's simply not true, and our goal is to help the public and policy makers understand that the preservation of education in our rural counties is a very important undertaking.
If you have any suggestions to make this study better, we would enjoy visiting with you about this issue. If we can help you in any way please contact us. Further, if you want any of our research, we are more than happy to share with you.