Conservation trust funds brace for budget cuts
Wednesday, June 22, 2011
By: Peter Kuo

Funding for land, water protection deeply affected by legislative action

In the aftermath of the General Assembly's budget battle, North Carolina’s four natural resource trust funds and – and nonprofit conservation organizations including CTNC – are bracing for significant reductions in funding.

The Clean Water Management Trust Fund (CWMTF) is the hardest hit, dropping from $50 million last year to $11.25 million for the next two fiscal years. The budget also prohibits using CWMTF money for land acquisition, except for buffers around military installations. Of the total appropriation, $6.75 million may be used for wastewater and storm water projects, as well as conservation easements and mini-grants on donated easements.

The Agricultural Development and Farmland Preservation Trust Fund (ADFPTF) fared better, receiving $1.7 million per year (a 15 percent cut). The previous General Assembly session turned the ADFPTF into a recurring item in the budget, meaning it would be targeted for some funding in every budget, and that remained true in this new legislative session. Lawmakers also partially restored funding for the current grant cycle that had been diverted to help reduce the current fiscal year deficit.

The budget diverts $8.435 from the Parks and Recreation Trust Fund (PARTF) to the General Fund for one fiscal year, leaving $18.94 million for PARTF in FY 2011-12. Of the remaining PARTF funds, $6 million per year will be used to pay for state park operating costs and $8 million will be used for facility repairs and renovation, and to pay back debt on previously issued bonds. About $4.2 million will be available for local government park grants and $705,000 for the beach access program.

The budget diverts $8 million from the Natural Heritage Trust Fund (NHTF) to the General Fund, leaving adequate funding to pay debts on previous bond issues but hardly anything for new acquisitions during next fiscal year.

The budget also transfers the Division of Forest Resources and the Division of Soil and Water Conservation from the Department of the Environment and Natural Resources to the Department of Agriculture and Consumer Services.

Despite the setbacks to conservation funding, the conservation community did block several other potentially damaging bills from passage. The budget diversions for PARTF and NHTF are only temporary and funding is set to return in FY 2012-13, assuming the state’s revenue picture improves.

Two bills introduced at the request of the development community and affordable housing advocates, H574 and S462, proposed to permanently divert 50 percent of proceeds from the deed stamp tax – which funds NHTF and PARTF – to the Housing Trust Fund. A strong lobbying effort by the Land for Tomorrow coalition prevented these two bills from passing. A second bill (S677) that proposed consolidating the four trust funds also met with strong opposition from Land for Tomorrow and failed to get a hearing.

And at the session’s end – after six years of effort and several roadblocks this session – the General Assembly passed legislation to help land trusts with their property taxes. The measure (H350) bill clarifies when property owned by land trusts will be exempted from property taxes, resolving inconsistencies and confusion caused by different tax rules in various counties. We owe special thanks to Reps. Chuck McGrady, Harold Brubaker, Edgar Starnes and Pricey Harrison for sponsoring H350 and Sens. Fletcher Hartsell, Tom Apodaca and Harry Brown for supporting the bill in the Senate.

The measure, sign by Gov. Bev Perdue on June 23, will ensure conservation properties are more uniformly exempted from property taxes across the state and will save land trusts almost $100,000 in reduced property taxes annually statewide.

The legislation clarifies that land being used for educational or scientific purposes, managed under a wildlife management or forest stewardship plan, placed under an easement to protect water quality, used for public access to trails or public waters, and/or held for transfer to a government agency for conservation will be exempt from local property taxes.

The General Assembly also passed several bills that will help farmland preservation.

• H406 allows farmers with less than 10 acres to enroll in the Voluntary Agricultural District program. They had been excluded because they did not qualify for the Present Use Value deferred tax program
• H168 exempts “bona fide” farms from city annexation and municipal extraterritorial jurisdiction.
• S309 allows Soil and Water Conservation Districts to establish special revenue funds for the stewardship of conservation easements.

Last but not least, the Tobacco Trust Fund Commission and Golden LEAF remain intact to support current and future agricultural development projects, albeit at slightly reduced levels. All of these measures combined reflect a more comprehensive policy framework under which to protect working farms and forest at the state and local levels.

The General Assembly adjourned on Saturday, June 19, but is scheduled to reconvene on Wednesday, July 13, to take up redistricting and, potentially, review any veto messages from the governor. A session on amendments to the state constitution is also due to occur after the end of the redistricting session.

Visit our Policy Priorities page to download reports on conservation legislation from this year and each recent session of the General Assembly.