As Congress struggles with debt reduction measures amid talk of the looming fiscal cliff, it is instructive to remember that more is at stake than just an across-the-board increase in income tax rates. Hanging in the balance as well is the wind energy tax credit, set to expire at year's end. Supporters are hoping that an extension of the tax credit is part of any cliff-avoidance deal.
Rep. Kevin McCarthy, a longtime supporter of the wind energy production tax credit, would serve his constituents well to work with House leadership to ensure these tax credits remain in place. The wind industry is a bright spot in an otherwise sluggish economy and the tax credit is critical not only to keeping the industry globally competitive but also in protecting Kern County from the damage that would likely ensue if the credit expires.
In case you haven't been paying attention, wind energy has become big business in Kern County. In the past year alone, the total value of wind energy properties in the county has increased by about $1.6 billion, according to the Kern County Assessor-Recorder's Office. Thanks to tax credits that have helped spur growth, there are currently thousands of construction jobs in wind just in Kern County alone. About 800 people are permanently employed by the industry in Kern and thousands of other jobs in manufacturing and retail are supported by the wind industry.
Take Terra-Gen Power, for example, a company that's building a massive wind farm in Eastern Kern. Terra-Gen pays $30 million annually in county property taxes and an additional $30 million in royalties to landowners. It purchases many of its trucks and tools from companies throughout Kern, including several in Bakersfield. Thanks to the growth in wind energy production, hotels and restaurants in eastern Kern are bustling. Bill Deaver, head of the Mojave Chamber of Commerce, says both the owners of a local hardware store and a RadioShack have told him they wouldn't have stayed in businesses throughout the recession if it weren't for the growth of the wind industry and its ability to drive sales at their stores. A Kern Community College District program to train alternative energy workers has placed about a third of its students since 2009 in wind energy jobs here in Kern County, and many of them are military veterans.
Is there any good reason to choke off that kind of growth, here or anywhere else in the country? No, but that's exactly what will happen if the production tax credit is allowed to expire at the end of the year.
Concerns about the nation's debt are legitimate, but this is not the time to pull the rug out from under an industry that is producing jobs and stimulating local economic growth. The wind industry in many ways is exactly the kind of industry that deserves this sort of government support. Not only does it promote goals of energy independence and green energy, but it has so many side benefits as well. Manufacturing of wind blades and other parts, for example, takes place domestically because the parts are so big and costly to ship. In fact, wind is one of the few areas where domestic manufacturing has seen growth in recent years.
To get this right, McCarthy must push for the House of Representatives to embrace the tax extender package already passed in the Senate. That package would extend the wind credit an additional year and, most importantly, allow wind companies to qualify for the credit if they begin construction but don't complete the project by the end of 2013. (Normally, a project has to be completed before the credit expires.) This is critical because it takes months for wind projects to get to the construction phase and with Congress taking so long to act, many projects can't be developed in time to take advantage of the one-year extension.
In the longer term, Congress must decide on a better approach to wind energy tax credits. The wind industry has been around since the 1970s. But it's still a growing, developing industry. To be competitive, it needs the same kind of help the government provides other energy producers. The current situation where the tax credits come up for expiration every few years is horrible policy. As Congress well knows, industries need certainty and predicability to succeed, and the wind industry certainly doesn't have that right now.