Lawmakers OK estate tax repeal, cap on conservation tax credits

By LARRY O'DELL
Associated Press Writer


RICHMOND, Va. -- The General Assembly gave final approval Wednesday to legislation repealing Virginia's estate tax and capping land conservation tax credits.

The Senate passed the measure 24-11. The vote in the House of Delegates was 66-22.

Lawmakers approved the legislation after reconvening to consider Gov. Timothy M. Kaine's amendments to the most tardy two-year budget in Virginia history. The existing budget expires at midnight Friday.

Although separate from the $72 billion biennial spending plan, the legislation repealing the tax assessed posthumously on the estates of millionaires was part of a delicate compromise that finally ended this year's historic budget impasse.

Conservatives have long pushed to repeal what they call "the death tax." The cap on the rapidly growing conservation tax credit program was added to the bill to help offset the estimated $98 million annual cost of the estate tax repeal and keep the budget in balance.

The legislation caps at $50 million a year the value of land eligible for tax credits in exchange for putting it off limits to development.

Kaine said Tuesday that while he favors elimination of the estate tax, state policymakers should not "grievously wound" land conservation tax credits to achieve that goal. Kaine spokesman Kevin Hall said the Democratic governor has not decided whether to amend the bill.

The tax credits have helped block development on thousands of acres, and Hall said the first-year governor views the program as "a powerful tool in his goal of conserving 400,000 acres by the end of his term."

The House Republican majority rejected Democratic attempts to strip the tax credit cap from the estate tax legislation. Democrats claimed linking the two programs violates the Virginia Constitution's requirement that bills be limited to a single purpose.

Del. Ward Armstrong, D-Martinsville, reminded his colleagues that citizens can challenge laws that are passed in violation of the single-purpose rule. He predicted that the statute "is going to end up before the Supreme Court because there's too darn much money at stake in these tax credits."

Copyright 2006, Daily Press