New Federal Budget Good News for the Environment
Tuesday, February 9, 2016
(a version of this article ran under Tim Abbott's byline in the January 14, 2016 edition of The Lakeville Journal).
The federal budget passed by Congress in December and signed into law the week before Christmas by President Obama contains significant conservation tax incentives and increased funding for important land protection and renewable energy programs.
"The spending package we passed last month was about as big a win for Connecticut land conservation as we can get,” said Senator Chris Murphy (D-Conn.). “As part of the deal, we permanently extended a critical tax incentive that encourages people to preserve and protect their land from overdevelopment, and we secured $10 million – more than three times the amount we got last year – for the conservation of our highlands. We also renewed the chronically underfunded Land and Water Conservation Fund for 3 years, giving the program some certainty as we make new investments to safeguard our nation's irreplaceable natural resources. I feel very privileged to have worked so closely with the men and women who fight for the conservation of Connecticut’s land and water every day, and I’m really proud of all that we accomplished this year.”
Both the FY2016 Omnibus Appropriations Act and Protecting Americans from Tax Hikes Act of 2015 passed with strong bipartisan support. Congresswoman Esty (D-5), Congressman Larson (D-1), Congressman Courtney (D-2), and Congresswoman DeLauro (D-4) all voted for the appropriations bill in the House which passed 318-109 with 77 Democrats in favor. Both Senators Blumenthal (D-Conn) and Murphy (D-Conn) voted in favor for the corresponding Senate bill.
“Connecticut’s conservation community has worked tirelessly with our House and Senate delegations to make the enhanced tax incentive for donations of conservation easements permanent and to ensure robust funding for the Land and Water Conservation Fund and the important land protection programs it supports” said Lynn Werner, Executive Director of the Housatonic Valley Association. “This investment made by Congress is vital to protecting our environment here in the State and truly a wonderful achievement.”
The new budget extended or made permanent more than fifty tax incentives, including several incentives for charitable giving. Among these is the enhanced tax incentive for donated conservation easements that was first enacted as a temporary provision in 2006 and is now permanent. Such easements are private, voluntary agreements, typically between private landowners and land trusts that permanently limit the uses of these properties in order to protect their conservation values. Before become a permanent part of the tax code, this incentive was subject to regular renewal and it sometimes lapsed before Congress granted an extension for the next fiscal year. This uncertainty made it difficult for property owners to evaluate the tax implications of their donation. The permanent incentive will be applied retroactively to Jan. 1, 2015.
“Predictability is important” said Congresswoman Elizabeth Esty (D-5) “which is why I voted to make the tax incentive for conservation easement donations permanent. This vote is a huge win for the land trust community--particularly to Connecticut's Fifth Congressional District, which is home to at least forty land trusts. Now, landowners across Connecticut and the nation will have the certainty they need to conserve even more land, allowing future generations to enjoy our natural abundance.”
Tax incentives for the renewable energy sector were also extended over multiple years in the new federal budget. These include the investment tax credit (ITC) for solar energy and the 2.3-cent-per-kilowatt-hour production tax credit (PTC) for wind power. A five-year extension of the wind energy PTC includes a gradual a phase-down of the industry-specific tax credit through 2019, while the ITC for solar will continue at 30 percent levels for both commercial and residential systems through 2018, dropping to 10 percent by 2022. Wind and solar producers predict that the percentage of each of their industry’s contribution to the national energy grid could double or even triple a result of these tax incentive extensions.
The Land and Water Conservation Fund or LWCF provides funding for nearly every federal land protection program outside the Farm Bill. Instead of using tax payer dollars, the LWCF receives a portion of the revenues collected on offshore oil and gas installations and was intended as conservation offset for those activities. Authorized for a maximum of 900 million, the LWCF has rarely received more than a fraction of that amount, which in turn impacts funding for the Forest Legacy Program and Highlands Conservation Act, both of which are critical sources of land protection funding in Northwest Connecticut. A three year reauthorization of the LWCF, funded in FY16 at $450 million, represents an increase of $144 over the previous appropriation.
The 2004 Highlands Conservation Act (HCA) provides funding for land protection within portions of four adjacent states, including 26 communities in Northwest Connecticut. Connecticut’s Department of Energy and Environmental Protection has received about three million dollars during the life of the HCA, leveraging more than 12 million in matching state, municipal and private funds to accomplish six land protection projects with partner land trusts during that same period. The HCA had been authorized for a maximum of 10 million annually, but never before this federal budget did it receive the full appropriate. Connecticut’s share of those funds could approach three million, equal to all the Highlands funding received in the previous decade.
As with any large piece of legislation, passage of the FY2016 Omnibus Appropriations Act required compromise and concessions. Along with its investments in land protection and renewable energy, the new budget also cleared the way for American oil producers to export on the world market. The current worldwide oil glut reduces the strategic imperative to restrict US oil for domestic use only, and low demand also affects its impact on atmospheric carbon, but allowing oil exports proved an environmental trade off necessary to get the final budget passed.
“While far from perfect, the year-end omnibus budget and tax package was a win for environmental conservation in Connecticut and nationwide” Said Senator Richard Blumenthal (D-Conn). “The dedicated conservationists of Connecticut's northwest corner have done tremendous work to protect the pristine landscapes of the region, and reauthorization of the Land and Water Conservation Fund and the permanent extension of the conservation easement tax credit-- two crucial and powerful tools for conservation—will greatly enhance and support these vital ongoing efforts.”