Debate Continues Over Wind Energy Tax Deals

By Camaron Abundes   
NewsWest 9

STERLING CITY- In 2001, the Texas legislature gave school districts the ability to offer tax incentives in a state wide attempt to lure big business back to the Lone Star State. Eight years later, some lawmakers are at odds with the law because it allows school districts to keep money made from those agreements out of the state's "Robin Hood" system.

Sterling City ISD is at the forefront of the debate. The district used the Texas Economic Development Act or House Bill 1200 to make five separate agreements with wind companies starting in the Spring of 2006. Sterling City ISD is slated to start receiving payments in 2010, but House Bill 1273 threatens to put the future of those payments up in the air.

The bill aims at changing how a school district reports those earnings. Some want to see the money back in the hands of the State so the money can be spread equally around to every district.

"We're very anxious to find out," Sterling City ISD Superintendent Ronnie Krejci wants to know if the law will pass and how it will effect the districts prospective payments.

Under a 313 agreement in the tax code, a company pays on the taxable value limitation starting in the third year of a deal. In other words, the company pays taxes on just a fraction of it's full value. The company then pays, the school district making the deal, a percentage of the savings directly. The rate is based on the county's tax rate. The payments are known as Pilot agreements and start in the third year of a deal and last through year ten.

The Associated Press reports the agreements will allow 44 school districts in the state to receive nearly $248 million dollars over the next ten years. Another 21 school districts have made similar deals.

Districts in Big Spring, Coahoma, Ector County, Forsan, Iraan-Sheffield, Stanton, and Andrews all made similar agreements, according to Moak, Casey, and Associates. The consulting firm helped dozens of districts broker Chapter 313 tax agreements.

"It's an opportunity to add to our educational program," Krejci says his district followed all the requirements when it made it's agreements.

Some argue the state is losing tax dollars in the deals. Dick Lavine, with the Austin-based Center for Public Policy, told the Associated Press that the district's are giving away the state's money and they can't do anything about it.

House Bill 1200 did set out to offer sweeping tax incentives. According to the document, it was intended to entice industries like renewable electricity to Texas but also covered other industries.

The document said between 1993 and 1998, Texas slipped in the national ranking in terms of attracting major new manufacturing facilities to the state, the law offered a tool to combat that shift.

"The state is claiming that the school districts who entered Chapter 313 agreements are giving away the state's money," Krejci said the agreements did want they were intended to do.

"As far as the renewable wind energy House Bill 1200 has certainly accomplished its purpose," Krejci said. "As evidenced here in Sterling County. It's working really well."