Gov. Dave Heineman signed a bill into law Tuesday that will pave the way for a massive wind farm project in Nebraska.
The wind farm bill (LB104) by Omaha Sen. Steve Lathrop will remove a barrier to the development and export of wind energy in Nebraska. It will offer tax incentives that could lead to Nebraska getting a $300 million to $400 million wind farm project by TradeWind Energy of Lenexa, Kan.
"I'm very pleased … and I was confident that after he looked at what LB104 will do for wind development in the state that he would see that this is a significant measure for rural economic development and tax relief where these developments will be located," Lathrop said.
There was fear that Heineman might veto the measure.
Heineman had said he opposed the measure because tax breaks should go to Nebraska taxpayers first. But he also supported a concept that was rolled into the measure that took away Omaha's ability to raise its sales tax.
What saved the measure from a veto was language that was added by Omaha Sen. Ernie Chambers attacking Nebraska's local option sales tax, which allows cities to ask for voter approval to raise local sales taxes beyond the state-imposed limit.
Without a law passed last year over Gov. Dave Heineman's veto, cities could ask voters to add only as much as 1.5 cents to the state's 5.5 percent sales tax. The new law lets them ask for as much as 2 cents.
Chambers successfully offered an amendment to the wind farm bill to preclude Omaha from asking voters for the extra half a cent in sales tax.
“I signed LB104 into law today because the most important issue in this bill is to protect Omaha taxpayers from a sales tax increase," Heineman said. "As I said earlier, I do not favor the part of this bill that provides a Kansas company a special tax break, when the Legislature didn’t provide new, significant tax relief to Nebraskans.
“This was a difficult decision, but my most important priority is protecting Nebraskans from a tax increase,” Heineman said.
Nebraska lags in the production of wind energy. Iowa, for example, generates more than 11 times as much -- 5,137 megawatts to 459, according to the American Wind Energy Association. And Nebraska ranks last among its neighboring states.
Proponents of LB104 said the state needed to act now if it wants to develop its abundant wind resources, because a major wind energy incentive -- a federal production tax credit -- is set to expire at the end of the year.
Lathrop's bill will fall under the Nebraska Advantage Act, which took effect in 2006 and is meant to encourage companies to expand and create jobs by offering them tax incentives. To date, about 320 companies have applied for Nebraska Advantage credits and created 20,500 new jobs.
The measure will provide a sales tax exemption for the purchase of turbines, towers and other wind farm components, which Iowa, Kansas and Oklahoma have used to create a wind energy boom. Meanwhile, Nebraska has lagged behind, ranking 26th of the 39 states that generate wind energy, despite having the fourth-best wind resources in the country.
When lawmakers passed the measure last week, they rejected a second attempt by Sen. Ken Schilz of Ogallala to gut Lathrop's bill and replace it with a version of another (LB402) by Omaha Sen. Heath Mello that would encourage more local ownership of renewable energy projects. It would have allowed a sales tax exemption on materials used in the projects, as long as a percentage of gross revenues went to Nebraska businesses or individuals. The exemptions would start at 10 percent for the first year, go to 15 percent the second year and to 20 percent in the third year.
Some groups, such as the Nebraska Farmers Union and Center for Rural Affairs, have said they support LB402 because it would create more economic development in rural areas by requiring purchases from Nebraska to qualify for tax breaks. The Sierra Club supported both bills.
Schilz noted that because Nebraska is a public power state, TradeWind would be required to offer 10 percent of the power it generates to Nebraska utilities while shipping 90 percent out of state.