The North Carolina General Assembly wrapped up business on Friday, August 3rd. For forestry interests, it was another successful session. A fairly quiet session quickly turned busy with a proposal to eliminate state funding for the Forest Development Program and double the severance tax on timber to make up for the loss of state money came to light. The tax is assessed on primary forest product producers. With the forest industry struggling with low prices and increasing imports, an increased tax is the last thing it needed. The final budget restored the existing state appropriations to the program and left the severance tax rate unchanged. Many thanks to the NCFA members who took the time to contact their legislators - it worked.

Another big success was the funding of the Agricultural and Farmland Preservation Trust Fund at a level of $8 million. This is the first time this trust fund has received this much money. The money can go to landowners for conservation easements and other farm and forestland conservation efforts, including additional funding to the Forest Development Program.

The final budget also contained authority for counties to hold a referendum to impose either a real estate/land transfer tax of up to .4% or a .25% increase in the sales tax. Unfortunately, timber deeds would be subject to a real estate transfer tax since timber is considered real property until it is cut. A .4% transfer tax would be in addition to the existing .2% tax that is currently levied. Half of the existing tax goes to the state and the other half remains with the county. The good news is that the voters in each county would have to approve this and many polls show strong opposition by the public to this tax. It seems likely that the urbanizing counties will push for the real estate transfer tax while rural counties may well opt for a sales tax increase. The budget also contained $349,000 for each of the next two years to fund the Beaver Management Assistance Program (BMAP). The NCFA has been very supportive of this program and the maintenance of funding. The budget also capped at 12.4 cents the wholesale component of the motor fuels tax rate for two years.

A major energy bill (S. 3) was passed that creates a renewable portfolio standard for power generation in North Carolina. The bill requires that 12.5% of the power generated in North Carolina by 2020 come from renewable sources.
Here is a summary of other bills that we were involved with or tracked during this session:

TIMBER THEFT
S. 393 and H. 441, Felony/Steal or Cut Another’s Timber: The Senate bill passed the Judiciary II Committee after being amended to raise the threshold amount from $1,000 to $2,500 and was re-referred to the Appropriations Committee and did not move. The House bill, H. 441, passed the House after being amended to increase the financial threshold to $2,500 and making only the second and subsequent offenses a felony. It was referred to the Senate Judiciary II Committee and did not move. No Action.

LAND DISTURBANCE
H. 1756, The Safe Artificial Slope Construction Act: Originally, this bill covered any land disturbing activity for the construction of roads for any purpose, including roads for the harvesting of timber or timber products. The bill would apply to road construction activities on any area located on a mountain face or steep hillside that has a slope of 25% or greater or is designated with a slide hazard ranking of moderate or high on a Stability Index Map prepared by USGS. The bill would require local governments to adopt ordinances to regulate site planning, design and construction of artificial slopes and such ordinances would have to meet the minimum standards set forth in the bill. The bill was changed to exempt timber roads and to increase the minimum threshold slope. No Action.

ENERGY
S. 3, Promote Renewable Energy/Energy Efficiency: This became a major piece of legislation and was ultimately developed over the course of six months of negotiations with many interest groups. The bill was ratified and sent to the Governor. It sets a renewable portfolio standard for North Carolina of 12.5% by 2020. The definition of renewable energy resource includes a broad range of resources including biomass, pulping liquors and energy crops. It also includes caps on increased costs for renewable energy and contains a four year phase out of the state tax on energy used by manufacturers. Ratified.
H. 222/S. 552, Manufacturers Energy Tax Exemptions: Incorporated into S. 3.
H. 526, Income Tax Credit – Energy Efficient Homes: The bill would provide an income tax credit for builders of energy efficient homes. It passed the House Energy Committee and was re-referred to Finance. No action.
H. 557/S. 634, North Carolina GREEN Act: An act to grow a renewable and energy-efficient economy in North Carolina (GREEN) by establishing a green business fund to be administered by the state energy office to provide seed grants to encourage the development of North Carolina’s green economy. This legislation was incorporated into the final budget bill.

BURNING
H. 1653, County May Ban Open Burning/Repeal Exemption: As written, the bill would give counties the authority to ban all open burning except open burning associated with land clearing. It appears this ban would apply to prescribed burning activities for any purpose. The Association of County Commissioners is working with the Division of Forest Resources to address some of these problems and will hopefully propose improved language. No Action.

REGULATORY CONSOLIDATION
S. 679, Consolidate Environmental Regulatory Commissions: No Action.

LAND/REAL ESTATE TRANSFER TAXES
Statewide authorization for a land transfer tax was included in the state budget, making 10 individual bills unnecessary.

TAXATION
H. 1715, Increase Excise Tax for Conservation: The bill would double the excise tax on any conveyance of real property (including timber transactions). The current tax is $1 per $500 of value. The bill would increase this to $2 per $500 in value. 35% of the money raised would go to the county general fund. The bill was never heard in committee. No Action.

WORKERS COMPENSATION INSURANCE
None of these bills were heard in committee. No Action.
S. 995, Workers Comp./Add to Schedule of Injuries; S. 996, Workers’ Comp. Annual COLA; S. 997, Increase Cap for Loss of Workers’ Organs; S. 1338, Amend Workers’ Compensation Act; H. 1622, Workers Comp./Reduce Threshold to One Worker

GREEN BUILDINGS/LEED
S. 502, Wilson Technical Community College Capital Funds: The bill would authorize appropriations of $950,000 to retrofit a building at the college to LEED standards. It was not heard in committee. No Action.
H. 666/ S. 581 Mecklenburg Building Permit Rebates: Originally, the bill would have allowed Mecklenburg County to provide building permit fee rebates for buildings that are built to Leadership in Energy and Environmental Design Standards. Eventually, the bill was amended to make it a statewide bill and to include allowance for the Green Globes standards as well as LEED and other nationally recognized green building standards. S. 581 was ratified.
S. 668 / H. 1075, Energy Conservation in State Buildings: Among other things, the bill would require that all major facility projects of public agencies be designed, constructed and certified to at least the LEED silver standard. The bill would allow the use of other standards if the LEED standard was judged impractical by the State Building Commission. The bill was successfully amended to remove LEED from it. The Senate passed the bill and then the House passed a version of it. Ratified.

PRESENT USE VALUE TAXATION
H. 1889, Present Use System Modifications: The bill creates a new category of land – wildlife conservation – under the present use value tax program and clarifies the present use valuation of property subject to a conservation easement. Although opposed by the NCFA, the Farm Bureau, county commissioners and state tax assessors, the bill passed the House. No action in the Senate.
S. 569, Wildlife Conservation Property Tax Relief : An act to provide property tax relief for qualifying wildlife conservation land. No Action.
S. 1203, Present Use Value Changes: An act to provide property tax relief for qualifying wildlife conservation land, to reduce the acreage requirement for agricultural land, and to clarify the present-use valuation of property subject to a conservation easement. No Action.
S. 1305, Present-Use Value Easement Tax Credit: An act to reduce the property tax of agricultural land, horticultural land and forestland where a perpetual easement continuing the present use is placed on the land. No Action.
H. 1499, Property Tax and PUV Changes and Studies: Among other things, the bill directs the Revenue Laws Study Committee to study tax relief options for non-developmental property. This includes extending present use value benefits to property that is used for wildlife conservation. Ratified.

EMINENT DOMAIN
S. 38, Eminent Domain: An act to amend the constitution of North Carolina to prohibit eminent domain from being used for economic development purposes. No Action.
S. 766, Eminent Domain: An act to allow differential treatment of nonprofit organizations whose property is condemned so as to allow replacement value rather than fair market value. No Action.
H. 878, Eminent Domain: An act to amend the constitution of North Carolina to prohibit condemnation of private property to be conveyed to other private owners for economic development and to provide for the prompt payment of just compensation with right of a trial by jury in all condemnation cases. Passed the House. No action in Senate.

CONSERVATION TAX CREDITS
H. 463, Conservation Tax Credit Modifications: An act to modify the credit for certain real property donations. The bill further defines acceptable donations by corporations to include, among other things, forestland and farmland conservation. A tax credit of 25% of the fair market value of donated land is allowed up to a maximum of $500,000. The bill requires such donations to be certified by the Department of Environment and Natural Resources as suitable for one of the qualifying public benefits and that an appraisal report be included. The bill makes similar changes for individual donations and donations by pass-through entities. It limits the maximum individual deduction at $250,000 and $500,000 for pass-through entities. Ratified and signed by Governor.

WILDLIFE CONSERVATION/TAX CREDITS
S. 841 / H. 620, Income Tax Credit for Wildlife: An act to allow an individual income tax credit for property taxes and expenses for qualified wildlife land. No Action.

LAND AND WATER CONSERVATION BONDS
S. 1522 / H. 990, Land and Water Conservation Bond Act of 2007: An act to authorize the issuance of general obligation bonds of the State, subject to a vote of the qualified voters of the State, to address statewide needs regarding land conservation, water quality protection, historic preservation and job creation. No Action.

FARMLAND PRESERVATION/TRUST FUND
H. 332, Funds/Farmland Preservation Trust Fun: An act to appropriate funds ($10 million) for farmland preservation. Action - $8 million incorporated into the budget.

BUILDING CODES
S. 490, Industrial Machinery – Building Code: An act to clarify that industrial machinery is not subject to regulation under the building code. Ratified.