Kaine loosens caps on conservation credits

By BOB LEWIS
AP Political Writer

RICHMOND, Va. (AP) -- Gov. Timothy M. Kaine on Friday recommended loosening caps the General Assembly would place on tax credits allowed for keeping land off-limits to development.

In actions on the same bill, Kaine concurred with a provision that would end the estate tax, which is imposed after death on the holdings of millionaires.

Amendments Kaine made to the measure double the total value of tax credits available annually for placing land into conservation easements within the Chesapeake Bay watershed. The cap would go from $50 million to $100 million.

The $100 annual cap would also be allowed to grow to reflect the rate of inflation.

Kaine felt a lower cap would neuter what he and lawmakers in both parties call the state's most effective land conservation and clean-water incentive.

The governor's amendments also eliminate a cap of $750,000 in total credits for any single transaction of land outside the bay watershed, mostly in southwestern and Southside Virginia.

The legislation helped resolve protracted and nettlesome negotiations last month to reconcile rival House and Senate versions of a new $72 billion state budget.

Republican conservatives for years had championed an end what they called the "death tax" at an estimated annual loss of about $98 million to the state treasury. They argued that the tax forces families to sell farms and businesses they had kept for generations and drives the wealthiest Virginians to move to one of about two-dozen states that have already repealed the estate tax.

Kaine, a Democrat, has also supported repealing the tax.

At the same time, the popularity of conservation tax credits represented an open-ended and growing drain on state revenues, so negotiators agreed to cap the credits at $50 million annually in the critical Chesapeake Bay watershed as a fiscal safeguard.

Kaine, who has pledged to put an additional 400,000 acres into permanent conservation use by the end of his four-year term in 2010, said the caps were too low.

"...The program must be structured so that incentives are only granted for the preservation of environmentally meaningful land. In addition, for budgeting purposes, the program's fiscal impact must be predictable," he explained in a news release.