CHEYENNE – Wyoming lawmakers rejected a pair of bills Thursday aiming to raise revenues through the state’s energy industries, one of which would establish an excise tax on electricity production in the state and another that would increase the tax burden for the wind energy industry.
Lawmakers on the Joint Revenue Committee heard hours worth of public testimony on the two bills, with the bulk of comments regarding legislation to double the state’s tax on wind energy generation, from $1 per Megawatt-hour to $2, and eliminate a tax exemption that applies to new wind energy projects in their first three years.
The proposal, which was expected to generate several million dollars for the state’s general fund as more wind projects start up in coming years, drew opposition from Cheyenne Mayor Marian Orr and Laramie County Commissioner Gunnar Malm, both of whom argued the bill would hamper ongoing and future projects. Orr pointed to recent sales tax figures in Laramie County exceeding expectations, largely due to construction of the Roundhouse Energy Project, as an example of the benefits of local wind projects.
“(The project) totally saved the day in these COVID times,” Orr said. “We projected a 25% revenue decrease when we did our budget. We are (now) sitting at an over 20% increase year to date. In September alone, we had an 82% increase in sales and use tax revenue from September of 2019.”
Orr noted the city of Cheyenne has recently signed a 30-year lease with NextEra Energy to lead the project on the Belvoir Ranch west of Cheyenne. Any change to the state’s tax policies, Orr argued, would be changing the game for companies committed to working in the state.
“We’re going to change the pieces on the game that we’re playing with them – how fair is that? And what does that signal to other businesses that are looking at coming in?” Orr asked the committee.
Several others, representing both wind-energy companies and local governments, spoke against the tax increase, which was also opposed by the Wyoming Business Alliance. Tom Darin, director of western affairs for the American Wind Energy Association, told the committee that Wyoming already has a high tax rate on wind energy compared to other states in the region.
“Increasing our taxes with these low regional prices, where the market – not legislators – pick winners and losers, may well be at a tipping point with a winning project,” Darin said. “Most importantly, the revenue and the jobs go to a neighboring state, not staying here in Wyoming. This is truly a case where a higher tax rate might seem attractive at first blush, but please listen to me and to the developers and others that will follow me today.”
Others argued the wind energy industry has been crucial for the state during the COVID-19 pandemic. Troy Udell, a Riverton resident who has worked on the Chokecherry and Sierra Madre Wind Energy Project near Rawlins, said the repercussions of raising the tax would be severe for those who found work on wind farms.
“I oppose both of these taxes, simply because I have witnessed the positive impact that our project and the surrounding projects have had on the communities, and simply because I feel that if this goes through, I’ll be looking for work out of state,” Udell told the committee.
While most who testified were against increasing the tax on wind energy production, a few spoke in favor of the proposal and, more generally, against the development of wind farms in the state. Albany County resident Jennifer Kirchhoefer worried how the wind turbines can distort Wyoming’s pristine landscapes and potentially deter tourism.
Rep. Tim Hallinan, R-Gillette, who drafted the proposal, was skeptical of the idea that raising the tax would drive projects out of the state.
“I think the fact is that we hear a lot of crying from the companies that produce this energy,” Hallinan said.
Hallinan’s bill, however, was rejected by the committee members by an 8-5 vote.
The other bill rejected by the committee would have established a new excise tax on any electricity generation in the state, at a rate of $1 per Megawatt-hour produced, with the inclusion of tax credits for companies to offset some of the new tax burden.
While much of the discussion Thursday focused on the tax increase for wind production, lawmakers also had little appetite for the electricity tax proposal, which would have imposed a 3.5% excise tax on earnings from any type of electricity produced in the state.
Committee co-chair Sen. Cale Case, R-Lander, argued the proposal was necessary as a way to ensure every potential taxpayer is contributing under Wyoming’s existing tax structure. However, he was one of just two lawmakers, along with Rep. Dan Zwonitzer, R-Cheyenne, to vote in favor of the measure.
While both proposals were rejected by the committee Thursday, a component of Hallinan’s bill – getting rid of an existing tax exemption for new wind energy projects in their first three years – will still be considered by the Wyoming Legislature next year, as the Joint Corporations, Elections and Political Subdivisions Committee recently sponsored a bill that would repeal the exemption.
The Joint Revenue Committee will meet again Friday to discuss possible increases to the state’s alcohol and tobacco taxes, among other issues.