North Dakotans Don’t Need a New Tax

Policy makers are asking: Should there be a production or extraction tax on wind energy, just like oil and coal?  We don’t think so. Wind energy is a different type of industry. The wind energy industry already pays state and local taxes that will increase as the industry grows. In 2016 wind paid $7.7 million in local property taxes.  And wind pays millions in state sales tax that goes to the general fund (oil and coal do not).  We shouldn’t add new taxes that will hinder economic growth.

A study done in 2017 by North Dakota State University shows that in 2016 the wind industry had a $170 million impact on the state’s economy and was responsible for $2.8 billion in construction expenditures and $119 million in manufacturing activities.

Despite the taxes paid and growing economic benefits to the state and our rural communities, some legislators believe that wind should pay a new production or “extraction tax” like coal and oil.  But wind is not an extraction industry and does not have the same footprint as oil and coal.  Oil and coal have significant regulatory and supportive programs at the state level and have the potential to impact North Dakota land quality, surface waters including major rivers, Lake Sakakawea, and groundwater.  So, an extraction tax makes sense for those industries.

Wind does not have the same footprint, or threat to other resources and does not require the same regulatory or supportive infrastructure of oil and coal.  There is no policy justification for a new state extraction tax on wind. Furthermore, a new tax is counter to our state’s conservative, market-based principles.

Instead of creating a new tax the legislature could revisit Senator Jessica Unruh’s plan in 2017 that reallocated property taxes paid by wind generation facilities from counties to the state’s general fund.  A permanent revenue stream generated from wind energy could be established by taking the incremental property tax increase (from 3% to 4.5% of assessed value of a wind farm) that was approved by the Legislature in 2015, and allocate to the General Fund. Counties did not expect or budget for a windfall in additional tax revenue, so bringing the incremental property tax back to the State General Fund would not be a hardship for wind producing counties. And counties would still benefit from the nearly $8 million (and growing!) taxes they already receive each year.

In short, we don’t need a new tax on wind.