A bill that would give sales and use tax remittances to TransAlta after it converts the Centralia coal-fired power plant to natural gas was heard before the Senate Ways and Means Committee on Wednesday.
Sen. John Braun, R-Centralia, told the committee that the deal the state and TransAlta struck five years ago to close the plant will cause major damage to the area’s economy.
In 2008, the state adopted Emission Performance Standards for power plants to meet greenhouse gas emission standards adopted in Washington. In 2009, the governor issued an executive order directing the Department of Ecology to work with TransAlta to make an agreement the plant would meet the new standards no later than Dec. 31, 2025.
The agreed order must include a schedule of major decision making and resource investment milestones.
“It put us on a path to eliminate hundreds of jobs, take away about two-thirds of assessed values in the community, the fire authority would lay off half folks, and cause rationing in school districts and county commission,” he said. “This bill helps incent a power company to make large one-time investment to replace most assessed value that’s been lost over 5 years.”
The proposed bill is a substitute of a previous version which set the sales and use tax exemption into July 2025.
The substitute version would provide the tax exemptions in the form of a remittance, none of which would be paid until the conversion of the facility was operationally complete, but not earlier than April 1, 2019. The exemptions included are labor and services to build the facility and the machinery and equipment needed during the conversion.
TransAlta would receive the money from the state after the conversion project was completed and they could demonstrate where they paid sales tax.
There is no fiscal note attached to the bill because the tax breaks wouldn’t go into effect until 2019, but legislative staff said the bill would give a rough, median estimate of about $89 million in refundable taxes to the multinational corporation.
Bob Guenther, president of the Thurston-Lewis-Mason Central Labor Council, testified in favor of the bill, telling the committee that in the last 44 years of operation the plant supplied nearly $200 million per year in the local economy.
He also said the future development of the Industrial Park at TransAlta will create a need for energy.
“Jobs will be created for the next 50 years in a 50-mile radius. Power from the plant will be needed,” he said. “This is a shot in the arm for our group.”
Sen. Jim Honeyford, R-Sunnyside, said the bill, “is essential” for Centralia, and reminded the committee that the state would receive no sales tax revenue if the plant isn’t converted.
