Conservation is lawmakers’ newest issue; A1
By Garren Shipley
(Daily Staff Writer)
The House of Delegates opened a new front in the General Assembly budget standoff on Tuesday, this time over conservation.
Local preservationists say they have a lot riding on the outcome.
House Speaker William J. Howell, R-Fredericksburg, said the Senate’s budget proposal “encourages [urban] sprawl” by placing new limits on a conservation tax credit program.
The two houses are still trying to find a compromise on a two-year state budget and a plan to mend the state’s ailing transportation system. Both financial plans are similar in the amounts of money they spend on things like education and public safety, but differ starkly in how they get there.
Senators have proposed a budget based on about $1 billion in new taxes for transportation each year, while the House backs a $2 billion, four-year plan that uses bonds and the state surplus for specific improvements in Northern Virginia and Hampton Roads.
With less than a week until a special legislative session begins, Howell said the Senate’s budget plan contains provisions that would hobble a state incentive program that gives tax credits to people who preserve land via conservation easements.
Environmental and conservation groups including Piedmont Environmental Council, Scenic Virginia, the Civil War Preservation Trust and the Middle Peninsula Land Trust were on hand in support of the House positions.
Both Frederick and Clarke counties operate conservation easement authorities that accept and hold donations from residents, and a state cap on the tax credit could be “very bad,” according to Wingate Mackay-Smith, who leads the Clarke County effort.
By donating an easement, land owners can give up the right to develop their property in perpetuity, giving or selling such authority to a nonprofit agency or government.
Present law allows donors to write off half the value of their donations from their individual or corporate state income taxes, as much as $100,000 per year or whatever it takes to zero out their income tax liability.
For example, an easement that reduces a property’s market value by $1 million generates a $500,000 tax credit. The donor can apply up to $100,000 toward state income taxes for five years, or sell the credits to someone else.
Both sides of the legislature wanted to change the rules.
Delegates want to expand the program by removing the $100,000 annual cap and make credits inheritable — allowing survivors to inherit the credits after a donor’s death.
But the Senate moved to limit the program, and imposed a cap of $600,000 in tax credit on any single donation, while leaving the $100,000 credit-use limit in place, as well as placing a cap on the total amount of credits given each year.
Had the Senate rules been in effect for the four-year life of the program, it would have cut the amount of tax credits by more than 44 percent, according to the Virginia Department of Taxation. Going forward, it would keep an additional $33.6 million in the state’s coffers each year.
Neither of the two chief patrons of the Senate plan, Sens. Emmett W. Hanger, R-Mount Solon, and John C. Watkins, R-Midlothian, immediately returned calls to their Richmond or district offices for comment, nor did Sen. H. Russell Potts Jr., R-Winchester.
Potts voted for the Senate bill on final passage. The area’s other Senate representative, Sen. Mark Obenshain, R-Harrisonburg, voted against the measure.
Just less than 15 percent of the entire land mass of Clarke County is under some form of conservation easement, according to the Piedmont Environmental Council.
Frederick County’s program simply wouldn’t exist without the tax credit program, said Richie Wilkins, chairman of the authority. And as land values go up, donations could hit a $600,000 credit cap quickly.
“There are a very few people that own big chunks of” Frederick County, he said, and tax credits are one of a handful of incentives for owners to preserve rather than develop.
Under the Senate plan, Frederick County’s program might dry up rather quickly, he said. “The only way to get the full value out of the [tax] credits is to use them yourself.”
New limits on the program would “hurt people earnestly trying to preserve their farms,” said Mackay-Smith, as one or two large donations might take up all the available credit.
Legislators are due back in Richmond to begin a special session to deal with the budget on Monday.