Ohio Tax: State lawmakers push competing tax break bills for green energy

by Aaron Marshall, 21 May 2010, COLUMBUS, Ohio - Time keeps on slipping for state lawmakers considering dueling bills aimed at luring green energy jobs to Ohio by easing the property tax burden on advanced and renewable energy projects.

If lawmakers don't act soon, Ohio may miss out on wind energy companies looking to capitalize on a federal stimulus fund tax credit for wind projects that expires at the end of 2010, say Big Wind lobbyists.

"There is window of opportunity to access these projects," said Brad Lystra, manager of economic development partnerships for the American Wind Energy Association. "It's critical for Ohio to move on this tax bill as soon as possible...so the state can immediately get boots on the ground and create significant amounts of manufacturing jobs in the Midwest."

Senate Republicans have made the first move, acting this week to overwhelmingly pass legislation slashing tangible personal property taxes for companies building alternative energy projects in Ohio. The Senate legislation funnels the tax break to projects from renewable energy sources such as wind, solar and geothermal but also extends the state handout to clean coal, advanced nuclear and co-generation projects.

A similar bill still parked in neutral in the House's Ways and Means Committee is cleaner and greener -- it only grants the tangible personal property tax cut to wind and solar energy companies. While majority-party House Democrats are standing firm, saying they only want wind and solar energy to be eligible for the tax break, time is running out to hash out a deal before summer break is due to arrive in mid-June.

House Democrats also must figure out how to handle a wrinkle added by the Senate: A provision giving local control to county commissioners to reject, accept or modify the tangible personal property tax break for alternative energy projects in their home counties. It was added mainly because the property tax cut would affect funding flowing to local schools and government.

There are a half-dozen or so wind energy projects currently on the drawing board in Ohio, which would create about 700 jobs, according to Sen. Chris Widener, the northwest Ohio Republican who sponsored the Senate's legislation.

Gov. Ted Strickland will attend a wind energy conference in Dallas, Texas Monday and is scheduled to make what his office called "a groundbreaking announcement regarding offshore wind energy in Ohio."

The Senate bill "essentially adds the next step to get to the development of renewable energies here in the state of Ohio," Widener told his Senate colleagues during his floor speech backing the bill. "We are behind where other states are when it comes to installed capacity and our tax code."

Sen. Karen Gillmor, a Tiffin Republican who was one of four GOP senators to vote against the legislation, told members that Ohio can't afford the corporate welfare giveaway, considering the state's still struggling economic condition.

However, wind lobbyist Lystra argues that Ohio can't afford not to do it -- given that the state's "prohibitive" property tax structure on energy projects results in a tax rate five or six times greater than surrounding states. He said both pieces of legislation being discussed would drop taxation rates to those comparable with other Midwestern states.

For whatever reason, Ohio barely has a wind energy presence -- only seven megawatts of wind energy are generated in the Buckeye State compared to 905 in emerging wind leader Indiana -- despite cracking the top 20 among states in potential for wind power.

The fact that Ohio's wind energy output is so anemic is striking because the state adopted strong renewable energy standards several years ago, urged on by green power lobbyists. By 2025, Ohio power companies will have to generate 25 percent of their power from advanced and renewable energy sources. So why isn't that hefty standard enough to get wind companies to blow into the state?

"It became very clear, very quickly that the tax burden on these projects was significant and a rate that was prohibitive to wind farm development," Lystra said. "Is it possible that this was missed -- that there was a miscalculation and this could have been fixed at that time? Possibly. But the fact is the campaign now needs a second phase."

With Ohio Gov. Ted Strickland pushing for the tax cut, House Democrats say they hope to work through the differences in the bills and strike a deal with Senate Republicans.

"It is my hope that we will get it done before we break," said Rep. Jay Goyal, a Mansfield Democrat who is a member of the House Democratic leadership team.