Kansas wind turbines

Rural Kansans’ billion-dollar subsidy of wind farms

From Kansas Policy Institute.

Rural Kansans’ Billion-Dollar Subsidy of Wind Farms

By Dave Trabert

Kansas wind turbinesNo, I’m not talking about any federal tax subsidies or mandates to buy high-cost wind energy that have forced higher taxes and electricity prices on every citizen. This billion-dollar gift comes in the form of local property tax exemptions. In some ways, this handout is even more insidious because the cost is borne by a relatively small number of Kansas homeowners and employers in the rural counties where wind farms exist.

Under current law, renewable energy producers enjoy a lifetime exemption from property taxes in Kansas. I testified last week in support of SB 435 to limit their property tax exemption to ten years.  As shown on an attachment to my testimony, the Kansas Legislative Research Department says there is a $108.4 million annual difference between the small fees paid in lieu of taxes and the taxes that would be due if taxed at the regular rates within each county. So technically, the legislation would only “limit” the property tax gift to $1.1 billion over ten years on existing wind farms; more tax gifts would still be done on new wind farms and other renewable energy facilities.

And while renewable energy producers were basically getting a free ride, property taxes on everyone else where going through the roof!

Giving property tax exemptions to private companies, regardless of the rationale, only increases everyone else’s property tax. Local government spending is not curtailed to absorb the exemption; cities and counties just raise taxes on everyone else. We encouraged the Legislature to also require that local mill rates be reduced proportionately if these property tax gifts are limited to ten years so that the new revenue from renewable energy producers’ property tax is used to reduce the burden on everyone else. (You should have seen the stink-eye this produced from the tax-and-spend crowd.)

Predictably, wind farm lobbyists lined up to protest that this legislation would increase their property taxes and send a bad message to the wind industry. Even local governments are opposed to taking away the exemption — after all, they can get their money from everyone else and take credit for bringing jobs and investment to their communities. They refuse to acknowledge that any economic benefit enjoyed by the green energy industry (and their own political benefit) comes out of the pockets of everyone else.

P.S. Remember this billion-dollar gift the next time you’re angered by cronyism in Washington, DC. Bad players in Washington often learn their craft at the state level; fending off bad policy at the state level has many long term benefits.


One thought on “Rural Kansans’ billion-dollar subsidy of wind farms”

  1. There has been a lot of interesting discourse in the past six weeks on wind energy and specifically the RPS. I regret missing most of the action being on an extended trip, but we can likely agree the House vote compared to the Senate RPS was interesting, to say the least.

    In response to Dave’s wind farm tax exemption blog, without going into an extensive discussion on the topic, I would like to point out the Elk River wind farm voluntary payments adds approximately $900,000 to a $2.4 million county budget (2011) with a 2% escalator for 20 years.

    Speaking of previously of agreeing, I assume we could also agree the business aircraft property tax exemption should also be open for discussion.

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