Va. Senate, House disagree on caps; B1
By Garren Shipley
Daily Staff Writer
Capping conservation tax credits is either a prudent move to curb abuse and protect Virginia’s bottom line or a prime example of being penny-wise and pound-foolish.
The distinction is just one more thing the Virginia Senate and House of Delegates don’t agree on.
House Speaker William J. Howell, R-Fredericksburg, said earlier this week — with the backing of a number of environmental groups — that the Senate’s budget plan, which contains the changes to the program, would hurt preservation efforts and promote urban sprawl.
But it was almost a non-issue.
Sen. Emmett Hanger, R-Mount Solon, the author of one part of the Senate’s plan, said the House and Senate might have put the matter to bed had the legislative session gone for another 30 minutes or so.
“We almost had it worked out,” he said.
The tussle is over a program in which landowners get breaks on their income taxes in exchange for giving up the right to develop their property.
In exchange for surrendering development rights — and thus reducing a property’s value — the state gives landowners an income tax credit equal to half of the property value they’ve given up.
Credits can be used, sold or traded.
Current law only allows for people and businesses to use $100,000 worth of credits each year.
The House of Delegates wants to remove that cap and expand the program.
The Senate wants to cap the value of any donation at $600,000. For example, a donation of a $2 million easement would be worth $600,000 in tax credits, rather than the current $1 million.
Local preservationists have said the Senate version of the plan could slow or even stop the donation of conservation easements in the area.
No one doubts that the program is successful, Hanger said. But even with record surpluses in the bank, the state just can’t be handing out tax credits without looking toward the bottom line.
Tax credits are “tax dollars, just as if you were appropriating them to spend,” Hanger said. That money could be used for other environmental priorities, he said.
Statistics for 2005 haven’t been complied yet, but in 2004, the state handed out $120 million in credits.
Most of the credits used to date have come from projects that fall under the proposed $600,000 cap, he said, and some of the larger conservation deals have been questioned by the Department of Taxation.
That’s why both versions of the bill have new safeguards to make sure that an easement is actually worth what it claims to be worth.
To qualify for a claimed value, development of the land has to be possible. In other words, someone cannot receive credit for giving up the right to build townhouses on the sheer side of a mountain.
Besides, he said, a cap is not a new idea when it comes to conservation tax credits.
Del. Clifford L. “Clay” Athey, R-Front Royal, said the argument is simpler than that.
“The Senate is against anything that means less revenue for the government,” he said.
Athey’s 18th District has been one of the primary consumers of the tax credits. As such, he doesn’t take kindly to the move to cap them.
The credit program is vital to the Northern Shenandoah Valley, he said, since it gives people a real alternative to selling off their farms and open tracts for development.
Leaders in the valley are trying to keep some open spaces free of houses, “unlike the way things are done in Northern Virginia,” he said.
Budget talks have broken down, but legislators are due back in Richmond on Monday to continue their work.