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Banks v. Heineman

ELR Citation: 43 ELR 20175
Nos. S-12-723, (Neb., 08/02/2013)

The Supreme Court of Nebraska held that a 2010 state law that changed the manner in which wind energy generation facilities in Nebraska are taxed is constitutional. As part of legislation passed to encourage the development of wind generation facilities in Nebraska, the state legislature enacted a new tax provision that exempted from taxation any depreciable tangible personal property "used directly in the generation of electricity using wind as the fuel source." This "nameplate capacity tax" replaced personal property tax on wind farm equipment with a tax on the megawatt capacity of the facilities to help spread out the upfront costs of building wind farms over a longer period of time. Taxpayers filed suit, alleging that the nameplate capacity tax operated to commute a tax in violation of the Nebraska Constitution. But the constitutional prohibition against commutation of taxes does not apply to an excise tax, and the nameplate capacity tax at issue is an excise tax. It is not dependent upon the value of the wind turbines and other equipment used to generate electricity. Instead, it is generally imposed on the privilege of owning wind generation facilities in Nebraska and is not measured by the value of those assets. Nor does the tax constitute special legislation in violation of the state constitution.