Year-end tax credits include breaks for coal, energy farms and families

Dec 17, 2015

By MBPC Staff

Helena Independent Record, December 17, 2015

BILLINGS -- For the Crow Tribe, getting an annual tax break on coal production is what keeps the government’s lights on, which before Congress extended 233 tax credits Thursday wasn’t a sure bet.

“Basically, all of our water lines, sewer lines and water treatment facilities, our tribal fish and game officers, our road departments, we subsidize a lot of those programs with coal money," sad Darrin Old Coyote, Crow Tribe chairman.

Marketing that coal depends on a coal tax credit, worth $2.26 a ton to Westmoreland Coal Co., which mines on the reservation south of Hardin. The Indian Coal Production Tax Credit takes the edge off the costs of dealing with federal agencies unique to tribal mining.

Old Coyote said Montana Republicans U.S. Sen. Steve Daines and Rep. Ryan Zinke had worked this year to make the tax credit permanent but fell short.

Zinke said he would work next year to make the coal tax credit more lasting.

"While I wish a permanent extension was included in this package, I am thrilled that Congress has seen the ICPTC’s necessity for coal-producing tribes, such as the Crow Nation,” Zinke said.

Thursday, the House voted to renew the production tax credit along with several others crucial to energy development, agriculture and Montana families, to name a few. The Senate is expected to take up the $680 billion tax package Friday.

For several years, people who depend on the tax credits have waited until the last couple weeks of December to see if the breaks would be renewed by Congress. This year, lawmakers promised to end the waiting game for some and delay it for others.

Renewable energy companies received a four-year production tax credit and alternate investment tax credit. At times in recent years, those tax incentives that promote investment in wind and solar energy projects have been renewed annually and sometimes retroactively. The 12th-month timing of the extensions made it nearly impossible to plan wind farms. Frequently, developers would be cutting Montana’s frozen December ground with bulldozer blades to qualify for retroactive tax credits that were really on the books for just a couple weeks.

The four-year plan approved by the House guarantees there will be a credit through 2019, but also reduces the size of the credit during that time. Wind power companies generally favored the increase even with the phased reduction, said Jeff Fox, of Renewable Northwest.

“The fact that the Wind Energy Association is mostly supportive of this phase-out is indicative of how far wind energy has come,” Fox said. “Production costs have gone down 66 percent in the last five years.”

Fox said several wind energy companies are eyeing projects in Montana, while NorthWestern Energy continues to add wind energy to its power supply. The tax credits will help.

Montana agriculture was poised to benefit from a bonus depreciation credit on equipment, which also benefits small businesses.

“This will allow farmers and ranchers to spend money in their rural communities, buy equipment and invest back into their farms and ranches,” said Bob Hanson with the Montana Farm Bureau Federation in a press release.

Businesses also received a permanent tax credit for research and development. The break is significant for new businesses that can use the credit to offset payroll if they don’t have income tax liability.

Low-income families, which number more than 70,000 in Montana, benefited from Congress making the Earned Income Tax Credit permanent for families with more than two children. Working families have come to rely on receiving the tax credit.

The Montana Budget and Policy Center estimates that 28,000 Montana families would be pushed into poverty without the Earned Income Tax Credit. Money freed up by the EITC Montana amounts to $151 million, most of which flows into the state economy.