Wind tax revenues play key local role

Published 10:37 am Wednesday, March 18, 2009

It doesn’t say anything about coveting the wind in the Bible and covet it do two financially stressed entities, but for very different reasons: Mower County and rural school districts.

Wind energy blows, not ill will, but good will for the Mower County Jail and Justice Center project.

Wind energy production tax revenues are expected to pay the principal and interest on the bonds the county needs to sell to fund the project.

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The latest forecast tells Donna Welsh, county finance director, Mower County could receive as much as $861,471 in wind energy production tax revenues this year.

Of that amount, the county’s share would be $689,170. The remainder under the current formula would go to townships and school districts.

“If we get that much money, (per year)” Welsh said, “it could pay the principal and interest on the bonds.”

Because the amount does not include new wind projects, which went on-line late in 2008, the amount could be higher.

Already, Mower County has sold $10 million in lease revenue bonds to fund the justice center portion of the largest capital improvement project in the county’s history.

That took place in December 2008, according to Welsh, who said some Mower County banks were among the bond purchasers.

That leaves the county to fund the $30.7 million jail portion of the project with general obligation jail bonds.

When bids were received March 4, county coordinator Craig Oscarson correctly predicted they were “too good to turn down.”

On Tuesday, the commissioners unanimously accepted more than $16-million in bids and awarded contracts for the project.

The commissioners are slated to act on the remaining bids Thursday.

By week’s end, everyone will know who received a contract for what portion of the massive project.

The prospect of having to pay more property taxes to help fund a project that has been consistently questioned prompted a late petition drive to request the commissioners hold a referendum on spending so much money to build a new jail and justice center.

The petition organizers gathered over the required 5 percent of the registered voters’ signatures, but the commissioners rejected the request Monday, saying Minnesota statutes, concerning general obligation jail bonds, do not require prior approval from voters.

Tony Bennett, a supporter of the petition, said Tuesday the citizens accepted the commissioners’ decision, but were “investigating new options,” which he declined to describe.

Coveting wind

Last December 2008, when Mower County held its Truth In Taxation hearing to discuss the proposed 2009 budget and property tax levy, the wind energy production tax revenues were already being coveted.

Anticipating a firestorm of criticism from taxpayers over property tax hikes in a depressed economy, the county commissioners were able to announce they could reduce a 21.688 percent property tax levy increase by 3.9 percent “based on an estimate of wind energy production tax revenues from an earlier budget estimate.”

Only two months earlier, when the proposed budget and property tax levy were being prepared for the December 2008 TNT hearing, the county estimated the wind revenues at $400,000.

When the TNT hearing was held, the revenue estimate had grown to $878,000.

Thus, the county commissioners were able to approve a property tax levy that included 3.9 percent levy increase to fund the county budget and a 14 percent levy increase to fund only the jail and justice center project.

While county officials and staff were touting the wind energy production tax revenues as a balm to heal bruised feelings over a double-digit property tax hike, Joseph Brown was watching for another reason.

Brown, the Grand Meadow superintendent of public schools, has coveted wind energy production tax revenues for many years to help school funding in the eastern Mower County district.

“Grand Meadow ISD 495 will lose $29,374 this school year from the Wind Energy Production Tax,” Brown said.

That’s because, the Minnesota Legislature changed the state aid school funding law to take away a district’s state aid equivalent to the — pun intended — windfall wind energy production tax revenues it received for wind farms located within a district’s geographic confines.

“This legislative change was initiated by Governor Pawlenty during the 2007 legislative session,” Brown said. “Attempts to change the law to its original format failed to receive support from the governor and legislative leaders during the last night of the 2008 legislative session.”

According to Brown, there’s a lot at stake for financially-stressed greater Minnesota school districts.

The Wind Energy Production Tax generated a total of $4,287,227 in new taxes in 2008, the superintendent calculated.

This additional revenue is collected by the Minnesota Department of Revenue and was to be distributed at the following rates:

80 percent to counties

14 percent to townships

6 percent to local public school districts.

Put aside Welsh’s figures for a moment and consider Brown’s nearly same amounts: Mower County will receive $689,109 in additional revenue, according to Brown’s math.

Mower County townships will receive $120,594 in additional revenue.

Then, the bad news.

“Mower County school districts would have received $51,683.22,” he said.

The breakdown shows:

Grand Meadow ISD 495

$29,374

Southland ISD 500

$21,482

LeRoy-Ostrander ISD 499

$826

All monies the financially stressed rural school districts could surely use.

“The legislative change initiated by Gov. Pawlenty will take $257,233 away from 40 school districts,” Brown said. “Local school districts were promised this revenue when the original law was passed in 2002.”

Bottom-line: Wind energy production tax revenues are coveted for two very different reasons: Mower County to build a two-story, 128-bed jail and justice center for law enforcement and the judicial system to fight crime and school districts to educate children and teenagers.

While Mower County’s 80 percent share of the wind energy revenues remains untouched, along with that of townships, local school districts’ shares do not.

Brown said that has to change.

“Efforts are under way to change the law back to its original form,” he said.

“The House Education Finance committee will hear testimony on H.F. 79.”

Today, Brown will testify before the K-12 Finance Committee of the Minnesota House.

State Rep. Robin Brown (DFL-District 27A) and superintendent Brown’s wife, is a member of that committee.

The goal: Convince legislators to restore the wind energy production tax revenue to K-12 public schools.

Randy Gronseth, rural Sargeant turkey producer, will testify with Brown.

And the question remains: Will wind energy blow ill will or good will for a county hoping to fund a new $30.7 million jail and justice center and rural school districts simply struggling?