By Lucas Nelsen, former staff member
Many people wonder what their community will get out of wind development, and in South Dakota, wind projects have generated more than energy. Important tax revenue for local schools, roads, and more have come from these projects.
In South Dakota, contributions of the projects came through nameplate capacity and production taxes, providing a tool for localities to offset the need for higher taxes. The nameplate capacity tax is based on the total energy generation of the project while the production tax assesses the actual production of a wind energy system.
Most of the revenue—all of the nameplate capacity tax and 20 percent of the production tax—collected from projects is sent back to the counties where they are located. This money is then split among school districts, the county, and townships.
While much of this revenue remains in the county, 2016 legislation decreased the portion local school districts receive over 10 years. The school district would keep their full share for the first five years, but in year six, the amount would decrease by 20 percent. At year 10, the revenue would be redistributed statewide instead.
As South Dakotans move toward a renewable future, communities must be able to keep these tax benefits local.
A fact sheet released by the Center for Rural Affairs analyzes the tax collection structure for wind projects in The Mount Rushmore State. Check it out at cfra.org/publications/WindEnergyTaxRevenueSD.
