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Schools get millions in wind farm deals

STERLING CITY -- Property values are soaring in this West Texas community, and the reason is obvious. Looming on the northern horizon, hundreds of newly built wind turbines dot the once-barren mesas.

Ordinarily, much of the tax money generated by the turbines would go to the state's "Robin Hood" school finance plan, which requires property-rich districts to share their wealth with those less fortunate. But that won't happen in Sterling City, at least not if school officials have their way.

The school district with an enrollment of 201 is among the dozens on Texas' wind-swept plains that have cut deals allowing them to collect hundreds of millions of dollars from wind farms without sending any of the money to the state. The deals give the energy companies operating the turbines massive tax breaks. In return, the school districts get part of the savings, all of it beyond "Robin Hood's" reach.

The Associated Press, using data compiled by the state Comptroller's Office, found that the agreements would allow 44 school districts to receive nearly $248 million over the next 10 years, the districts' cut of more than $700 million in tax breaks they granted wind-farm operators. Another 21 school districts have made similar deals, but the agreements had not been completed when the data were collected by the comptroller.

The money, the magnitude of which has only recently become known, has led to a brewing controversy. School officials believe their districts -- many of them small, rural and historically lacking in resources -- deserve a payday that is theirs alone. But some watchdog groups and lawmakers contend that the windfall should be included in the state program to equalize funding for all students.

Wind-industry officials say the tax breaks offered by Texas school districts have helped lure wind farms to the state, making it the top wind-power producer in the nation.

"[Energy companies] don't have to be here," said Greg Wortham, executive director of the West Texas Wind Energy Consortium, an industry interest group based in Sweetwater. "They're going to be anywhere the wind blows, and that covers a million square miles."

The money being channeled back to the school districts through payments in lieu of taxes, or PILOT agreements, should be considered a "finder's fee" for putting the deals together, Wortham said.

"It seems like a totally reasonable thing to me," he said.

But critics contend that wind farms would come to Texas even without the tax breaks, that the payments to the school districts are little more than kickbacks and that the deals could cost the state billions in lost tax revenue.

"It's the school districts giving away the state's money, and the state has nothing to say about it," said Dick Lavine, senior fiscal analyst for the Austin-based Center for Public Policy Priorities.

The deals have their basis in the Texas Economic Development Act, a 2001 law that allows school districts to offer tax breaks similar to those handed out by county and city governments. Such property is taxed at full value for two years and then at a limited value for eight. A negotiated portion of the savings is passed on to the district.

The deals, consummated with little public attention or government scrutiny, have recently drawn interest from lawmakers and other officials as a result of the comptroller's data, which were published in January.

During a meeting of the House Ways and Means Committee Wednesday, committee Chairman Rene Oliveira, D-Brownsville, and others on the panel expressed incredulity at the arrangements. Noting that he was an author of the economic development act, Oliveira said, "I didn't know I was creating a Frankenstein."

Perhaps nowhere is the matter better defined than on the ranch land of Sterling County, where four wind farms have been built and a fifth is planned.

The four projects already in place will allow the Sterling City school district, the only one in the county, to collect at least $47 million over the next decade as compensation for more than $100 million in tax breaks it gave to wind farm operators.

The district, rich in oil and gas reserves, has been regarded as wealthy since the "Robin Hood" law went into effect in 1993, and its superintendent, Ronnie Krejci, makes no bones that the wind deals were made largely to give the district money the state couldn't recapture.

"My argument, on behalf of Sterling City ISD, is we have paid our dues with 'Robin Hood,'" he said.