Normally the conservative mindset in South Dakota would be heavily in favor of reducing taxes. However, this particular proposal if passed would eliminate portions of the tax code that in total generates approximately $90 million in revenue.

SB 55 will remove the Contractor’s and Excise Tax to preclude collecting revenue on construction projects that will generate electricity including solar, geothermal, biomass or wind. The measure is filed in the South Dakota Legislature by The Committee on Taxation at the request of the Department of Revenue and endorsed by the South Dakota Wind Energy Associates.

Paul Bachman is the Executive Director of the group and gives the results of a task-force study that investigated why South Dakota lags in wind generation.

“The conclusions of the task force were that South Dakota has a much higher tax rate for these projects than North Dakota, Minnesota and Iowa.”

That task force study was conducted in 2012. As a result the 2013 legislative session responded somewhat, but it was not enough to be on par with our neighbors.

“An approximately 300 megawatt project was sited just across the border in North Dakota. One percent doesn’t seem like a lot, but the margins on these projects are that tight.”