By Gene Meyer | Kansas Reporter
FAIRWAY — Nearly 150 central Kansas energy workers were drafted this week into the front lines of a philosophical battle over taxes and energy.
Siemens Wind Energy announced Tuesday it was laying off the Kansas workers — nearly half the workers at its new Hutchinson manufacturing plant — and more than 640 others in Iowa and Florida because of uncertain economic prospects and Congress’ apparent unwillingness to extend tax credits for renewable energy producers that expire Jan. 1.
The company, a unit of the Siemens global technology giant based in Germany, said it hoped to recall the workers, when the economy improves and the credit is extended.
The tax credit provides a more than 2 cents per kilowatt-hour to producers who generate electricity from wind, biomass or other renewable sources, to help cover their costs of plugging into the nation’s coal and natural gas-powered electric grid.
Fiscal conservatives such as U.S. Rep. Tim Huelskamp, R-District 1, who represents Hutchinson, say the credit should expire.
“When it was started in 1992, it was supposed to be temporary,” Huelskamp said. “Two decades later, the time has come for wind to stand on its own. With America exceeding $16 trillion in debt, Washington cannot and should not continue to artificially subsidize one source if energy over another.”
Supporters of the extension, including Kansas Gov. Sam Brownback, who called for its continuation at an American Wind Energy Association convention June in Atlanta, say its benefits outweigh that concern.
“Kansas understands the positive impact that wind energy can make,” Brownback told the convention.
“More than 1,200 new, high-paying manufacturing jobs have been announced in Kansas in the last two years directly related to renewable energy,” he said. “Kansas also has more wind-energy construction projects under way than any other state … and nearly $3 billion of new investment from 2011 to the end of 2012.”
Calculations of the full impact of the layoffs on Kansas’ economy varied Wednesday.
“We lost about 150 good jobs paying between $32,000 and $35,000 a year,” said Jon Daveline, president of the Hutchinson/Reno County Chamber of Commerce. That works out to about a $5 million hit in the community of 41,000.
“Those are real dollars,” Daveline said. “(Their loss) will impact car sales, grocery sales, the mall, everyone.”
A broader stake shared by taxpayers across Kansas seems less likely to be hurt, said Dan Lara, spokesman for the Kansas Department of Commerce, which is the central agency overseeing development and economic incentive activity in the state.
Precise shares of how much of Kansas’ $3 billion incentive is tied to Siemens’ Hutchinson plant aren’t easy to determine. The state moved a highway and stretched its curves, so trucks could more easily haul the giant generator nacelles made there, for example. But other businesses use the road too.
Two taxpayer-subsidized incentives for the plant that are measurable seem unlikely to be affected by Siemens’ move, Lara said.
Kansas offered Siemens $5 million in solar and wind bonds to help finance parking and other infrastructure around the 300,000-square-foot manufacturing plant. The bonds allowed Siemens to use workers’ payroll taxes, which normally would become part of the state’s general fund, to repay the bonds.
“Kansas isn’t on the hook for any of that money,” Lara said. “That’s between Siemens and the investors.”
Siemens also was promised $3 million in payments from a Kansas Economic Incentives Opportunity Fund that pays companies for hitting promised targets for creating new jobs over five years.
Siemens already hit its earliest targets before announcing the layoffs and will be paid for doing that, Lara said. It won’t be paid any further money if does not hit future ones, he said.
Contact Gene Meyer at firstname.lastname@example.org.