Wind turbines are taxing issue in Minnesota

Exemption proves costly to county

Associated Press

LAKE BENTON, Minn. -- Tiny Lincoln County, one of southwestern Minnesota's poorest and most remote areas, is trying to keep its tax revenues from blowing away.

After some 450 wind generators helped bring in more than $300 million in development to the area, the county is fighting to reverse tax breaks on the generators which have caused the cash flow to shrink.

More than half of the generators are in Lincoln County, where they have changed life and the landscape.


But after last year's Legislature enacted tax relief for the state's commercial and industrial taxpayers, tax revenues from the generators dropped 37 percent, from $757,634 to $475,442 for the county.

In March, the County Board voted unanimously to place a 60-day moratorium on construction of new generators. Two other counties followed suit.

"The action we took was to get the attention of people to recognize there needs to be some better way" of taxing the generators so they pay their fair share for roads and other services, said Board Chairman Larry Hansen of Tyler.

The county is proposing to replace a property tax with a graduated tax on electricity production. If the compromise becomes law, the moratorium would be repealed quickly, said Jim Nichols, Lincoln County commissioner and generator minder.

Greg Jaunich, chief executive of Minneapolis-based wind developer Navistas Energy Inc., has objected to earlier proposals he said could drive some existing projects into default and some proposed projects into South Dakota.

But Jaunich said his company would not object to tax changes as long as they are "revenue neutral" and would not increase costs for towers already built. However, the compromise envisions some payments based on production for wind developments that now are exempt.

Developments of less than 2 megawatts don't pay property taxes at all.

The predominantly rural county's population dropped by 22 percent to 6,429 in the past two decades. It was one of seven counties in the state with less than $20,000 per capita income, according to a 1999 study.


Aside from wind machines, "we don't have a lot of commercial-industrial property," Hansen said.

"It's a new cash crop," said Dan Juhl, who has wind generators on his own property in neighboring Pipestone County and helps farmers develop generator plans and financing. "The difference is these combines are 200 feet in the air."

Farmers can earn $2,000 to $5,000 a year for use of less than an acre for a generator. In Lincoln County alone, the wind industry has created an estimated 50 jobs.

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