2006 Legislation

I. Land and Water Conservation Funding

S 1122 - Land and Water Conservation Study Commission – Establishes The Land and Water Conservation Study Commission (LWCSC) in response to Land for Tomorrow’s efforts to pass the Land and Water Conservation Bond of 2006. The legislation directs the LWCSC to:

1. Identify and evaluate the existing sources of State funding for: (i) the public acquisition of land or interest in land to protect drinking water quality and prevent polluted runoff, conserve rivers, wetlands, floodplains, coastal waters, working farms, working forests, local parks, State parks, game lands and other natural areas, urban forests, and land visible from scenic highways in North Carolina; (ii) historic preservation; and (iii) economic and community development tied to land and water conservation and historic preservation.
2. Collect research and information from North Carolina and other states and jurisdictions regarding incentive based techniques and management tools used to protect land and water and assess the applicability of such tools and techniques to land conservation in North Carolina.
3. Prepare a draft report with a statement of the issues, a summary of the research, and recommendations to address funding needs and other issues affecting land and water conservation in North Carolina.
4. Hold at least three public meetings, including at least one meeting in the Mountains, Piedmont, and the Coastal Plain region of the State to present the draft report and recommendations to the public and user groups.

The commission will consist of 16 members, five appointed by the President Pro Tempore of the Senate, five appointed by the Speaker of the House, the Treasurer or the Treasurer’s designee, the Director of the Governor’s Policy Office or the Director’s designee, the Secretary of the Environment and Natural Resources or the Secretary’s designee, and three representatives from the public at large appointed by the Governor. The commission will have two co-chairs, one designated by the President Pro Tempore of the Senate and one designated by the Speaker of the House. The Commission will report its findings and recommendations to the General Assembly and the Environmental Review Commission on or before February 1, 2007.

Status: Ratified and presented to the Governor on 7/27.

S 1741 - Modify Appropriations Act of 2006 (FY ’07 State Budget Revisions) – Funds the Clean Water Management Trust Fund (CWMTF) at $100 million for FY ’07. Fully funds the Park and Recreation (PARTF) and Natural Heritage Trust Funds (NHTF), but does not include funding for the Agricultural Development and Farmland Preservation Trust Fund (ADFPTF). Includes $15 million for expansion of Hickory Nut Gorge State Park and increases funding for the Agricultural Cost Share program managed by the Division of Soil and Water Conservation in the Department of the Environment and Natural Resources (DENR). Also includes extension of NC Conservation Tax Credit “sunset” for maximum amount of credit that can be received by members of a partnership or other pass through entity, keeping the maximum credit at $250,000 for each individual in the partnership through the end of 2006, at which time the maximum credit will apply to the partnership as a whole.

Status: Ratified on 7/6 and signed by the Governor on 7/10.

H 2827/S 1907- Land and Water Conservation Bond Act of 2006 (Land for Tomorrow) Sponsored by Senator Clodfelter (D-Mecklenburg) and Rep(s). L. Allen (D-Franklin), Hackney (D-Orange), Wainwright (D-Craven), and McComas (R-New Hanover), this legislation would have placed a bond referendum on the November 2006 ballot. If approved by the voters, the referendum would have authorized the issuance of $1 billion in Land and Water Conservation Bonds. The legislation allocated the proceeds of the Land and Water Conservation Bonds ($200 million/year for five years) as follows:

• 31.25% Natural Heritage Trust Fund
• 19.75% Clean Water Management Trust Fund
• 17.5% Parks and Recreation Trust Fund
• 15% Agricultural and Forestry Development and Farmland and Forest Preservation Trust Fund
• 15% Landing Jobs Initiative
• 1.5% One NC Naturally program

In addition to allocating funding to the various trust funds and programs, this bill also would make changes to the missions of some of the above trust funds. The NHTF would be authorized to acquire land and structures with natural or cultural heritage values. Funds could be used to restore, rehabilitate, or repair historic structures, and to restore or ecologically manage land in natural areas through activities such as prescribed burnings, removal of exotic species, or other similar efforts. This bill changes the name of the ADFPTF to the Agricultural and Forestry Development and Farmland and Forest Preservation Trust Fund, expands the trust fund to include funding forestry programs and adds six representatives to the ADFPTF Advisory Committee representing forestry interests.

S 1892/S 1621 - Special Indebtedness Projects/ H 2485Wildlife Commission Indebtedness – Sponsored by Rep(s). Hill (D-Columbus), Ed Jones (D-Halifax), Williams (D-Beaufort), and Wray (D-Northampton) and Sen. Hoyle (D-Gaston). These three bills each authorize the issuance or incurrence of special indebtedness in the maximum aggregate principal amount of $20 million dollars to finance the costs of purchasing land to be administered by the Wildlife Resources Commission as State game lands. The funds will be used primarily to purchase a portion of the 76,000 acres the Nature Conservancy had bought from International Paper in North Carolina.

House Status: H 2485 Referred to House Committee on Finance on 7/11
Senate Status S 1892: Passed Senate on 7/10
Senate Status S 1621: Conference Committee Report adopted on 7/21
S 1621 Ratified on 7/26.

H 2493 - Farmland Preservation Funding – Sponsored by Rep(s). Harrison (D-Guilford), Hill (D-Columbus), Brubaker (R-Randolph) and Underhill (D-Craven), this bill would have appropriated $10 million to the Agricultural Development and Farmland Preservation Trust Fund for the 2006-07 fiscal year to purchase agricultural conservation easements or for the preservation of farmland as provided in Article 61 of Chapter 106 of the NC General Statutes. This bill had 90 cosponsors.

Status: Referred to House Committee on Appropriations on 5/24. Representative Pricey Harrison (D-Guilford) offered two amendments to add $500,000 to the state budget for the Agricultural Development and Farmland Preservation Trust Fund
Note: Both attempts failed by voice vote in the House Appropriations Committee.

II. State Parks

H 2127/S 1592 - State Parks System Additions – Sponsored by Rep(s). Justice (R-Pender), Grady (R-Onslow), and Harrison (D-Guilford) and Sen. Albertson (D-Duplin), this legislation adds Mountain Bog State Natural Area and Sandy Run Savannas State Natural Area to the State Parks System. Both natural areas have been found to possess biological resources of statewide significance. The bill also authorizes the Division of Parks and Recreation of the DENR to study the feasibility and desirability of establishing a state park at Cabin Lake. The Division will report its findings and recommendations, including any legislative proposals, to the Environmental Review Commission on or before January 15, 2007.

Status: H 2127 Ratified 7/11 and signed by Governor on 7/19.

III. Soil and Water Conservation

H 2129/S 1596 - Community Conservation Assistance Program – Sponsored by Rep. Justice (R-Pender) and Sen. Albertson (D-Duplin), this bill establishes the Community Conservation Assistance Program in the Department of Environment and Natural Resources (DENR). The Program will be implemented and supervised by the Soil and Water Conservation Commission. The purpose of the Program is to reduce the input of nonpoint source pollution into the waters of North Carolina. State funding will be provided to support community conservation practices and will be limited to seventy-five percent of the average cost of each practice with the assisted applicant providing twenty-five percent of the cost. Priority for inclusion in the Program will be given to projects that improve water quality. The Community Conservation Assistance Program Advisory Community will be established to review the Program prior to implementation.  The advisory committee will consist of 15 members who will meet quarterly to review the progress of the Program.

Status:  Ratified on 6/29 and signed by the Governor on 7/10

H2208 CWMTF Amendments  – Sponsored by Rep. Gibson (Anson-D), this bill clarifies that grant criteria established by the Clean Water Management Trust Fund Board of Trustees have priority over the “common criteria” that were adopted by the legislature last year to apply to grants made by the CWMTF and the state water revolving loan funds.  It also repeals the 20% match requirement adopted by the legislature.  In the Senate Committee on Agriculture/Environment/Natural Resources, Sen. Cowell (Wake-D) offered an amendment to establish term limits for Trustees.  The amendment passed on 7/10.

Status: Ratified on 7/17.

IV. Conservation Tax Incentives

S 1451 - Delinquent Property Tax/Inventory/Study – Sponsored by Sen. Hartsell (R-Cabarrus), this bill authorizes the Revenue Laws Study Committee to study and recommend any changes to the special class of property taxed on the basis of the value of the property at its present use.  The study will include an evaluation of expanding the present-use value system to include wildlife land and other conservation land and adding more specific land resource management criteria to the sound management programs required for lands enrolled in the present-use value system.

Status: Ratified in the Senate on 7/6 and signed by the Governor on 7/13.

H 2156/S 1563 - NC Conservation Tax Credit Amendment – Sponsored by Rep. Pryor Gibson (D-Anson) in the House and Sen. Dan Clodfelter (R-Mecklenburg) in the Senate. One of the primary issues this bill addresses is conservation tax credit for pass-through entities (partnerships, LLCs). As of January 1, 2006, the maximum credit allowed to a pass-through entity became $250,000. This bill would increase the credit for the entire pass-through entity to $500,000. Individuals and corporations of a pass-through entity may each receive a maximum credit of $250,000, but the combined credits of the pass-through entity may not exceed $500,000, the same as regular corporations.  The bill also addresses the issue of refundability – allowing the conservation tax credit to be refundable for landowners. This bill will allow individuals to either carry forward any unused portion of their conservation tax credit for five years or carry forward any unused portion of the credit for two years and then receive a refund from the state in the third year equal to fifty percent (50%) of the remaining unused credit. If passed, North Carolina will become the second state in the U.S. to have a refundable conservation tax credit.  Finally, this bill would allow corporations to use the credits against the franchise tax, the income taxes, and the gross premiums tax. Any carryforwards of a credit must be claimed against the same tax.

House Status: Referred to Committee on Finance on 5/18
Senate Status: Amendments introduced in the Senate removed the refundability and new tax credit maximum for pass through entity portions of the bill. Bill passed the Senate on 6/22.
Note: Extension of current conservation tax credit maximum for individuals in pass through entities or partnerships at $250,000 per individual included in state budget bill (see S 1741).

H 1722/S 405 Wildlife Conservation Present-Use Value - Expands lands eligible for present-use value tax status to those managed for wildlife conservation. House bill states the purpose of present-use value is to promote preservation and other non-production oriented uses, such as wildlife habitat, through a property tax system that is equitable with the productive capacity of undeveloped lands. House bill also clarifies property tax exemption for nonprofit organizations that own property under easement or being managed long-term for conservation purposes.

Status: Referred to House and Senate Committees on Finance on 3/7/2005.
Note: Both bills determined ineligible for consideration during Short Session. Study of issues by Revenue Laws Committee authorized in S 1451.

S 1203 - Agrarian Growth Zones - Sponsored by Sen. Albertson, this bill defines and draws out the guidelines for the designation of agrarian growth zones, which would be eligible for economic development incentives through the William Lee Act.  An agrarian growth zone is defined in the bill as an area comprised of one or more contiguous census tracts, census block groups, or both, in the most recent federal census that meets the following conditions:

1. All land within the zone is located in whole within a county that has no municipality with a population in excess of 10,000.
2. Every census tract and census block group that composes part of the zone has more than twenty percent (20%) of its population below the poverty level according to the most recent federal decennial census.
3. The area of the zone less the smallest census tract included in the zone does not exceed five percent (5%) of the total area of the county in which the zone is located.

The Secretary of Commerce will determine whether an area is an agrarian growth zone. 

House Status: Referred to House Committee on Finance on 6/27
Senate Status: Passed Senate on 6/22