It’s rare that a public official ever finds fault with tax incentive programs (where government forgoes tax revenues in exchange for jobs.) Texas Comptroller Susan Combs, however, finds that a special tax break the state’s schools can offer is paying an awful lot of money for jobs in the wind power business.
Texas doesn’t have an income tax, so its revenues come from sales and property taxes. The state has given local school districts the power to exempt companies that create new jobs from the school property tax. This doesn’t cost the local districts anything. The state reimburses the districts for allowable exemptions. And the local districts can negotiate side deals with the businesses to share in the tax savings.
Some 98 projects have won tax breaks. Two thirds of those are wind farms. In those 63 wind farm projects that won exemptions, Combs found, the cost per job tops $1.6 million.
Yes, the state of Texas is giving up $1.6 million for each wind power job that receives an exemption. The cost per job for manufacturing projects is $166,000. For research jobs, $51,000.
“And wind farms are getting a disproportionate share of the tax benefits, according to the report,” writes Austin American Statesman reporter Laylan Copelan. “They are projected to receive 38 percent of the tax benefits awarded to the 98 projects but represent only about a fourth of the capital investment and 8 percent of the promised 6,239 jobs.”
Of course, most of the wind power investment is being made in windy and quite rural West Texas. The epicenter of wind development in the state is Stillwater, population 11,000, a town that has been revitalized by the wind business. The mayor, Greg Wortham, is also executive director of the Texas Wind Energy Clearinghouse and he naturally defends the tax credits. He points to Stillwater’s vibrant Main Street as proof of the industry’s worth. The county’s tax base has increased five times in the last five years, to $2.5 billion.
“These are real Texas jobs — welders and truck drivers — and (royalty) money to farmers and ranchers” where the windmills are built, Wortham (above) said.
With the side deals and the reimbursements, some rural districts are raking in millions. And that is creating an imbalance in funding between districts. “A child in West Texas shouldn’t be worth twice what a child is worth in East Texas,” said one rural legislator from not so windy East Texas.
The Texas legislature will attempt to deal with this issue, beginning in January. But the conflict is one of equity between rural and urban only this time, the rural districts are making the killing. Then, again, says one Panhandle legislator, “This is the next oil boom. We’re sorry you are not getting it in Austin, but you don’t put up with the wind.”