As you make your decisions on which programs to fund during this very challenging budget year, the Chesapeake Bay Foundation strongly recommends that you continue the $10 million in funding for theResource Enhancement and Protection Tax Credit Program (REAP) that has become a national model, and a cost effective way to help farmers all across the state comply with federal and state mandates to reduce nutrient and sediment flowing into our rivers and streams. While we believe that serious water quality issues warrant an increase for REAP, the current cap is justified, at a bare minimum.

Enclosed please find the 2007-2008 report by the State Conservation Commission on the REAP Program that documents the environmental results from the best management practices funded under this program which reimburses farmers with tax credits for from 25 to 75 percent of their cost of installing these practices.

Farmers throughout the state, and especially in the Chesapeake Bay Watershed, are required by the federal Clean Water Act to implement effective measures to comply with water quality mandates as well as new pollution budgets for locally impaired streams in Total Maximum Daily Load Plans.

We are very concerned that Senate Bill 850, by substantially reducing all tax credit programs, puts REAP in great peril. Not only does REAP deliver critical financial assistance with very low administrative costs, the tax credits support some of the most cost effective pollution measures available.

For example, in the Chesapeake Bay tributary strategy, agricultural best practices achieve 75 percent of nitrogen pollution reduction but account for only 7.2 percent of the strategy’s total cost. Moreover, $10 million in REAP tax credits leverage about $13 million in spending from other sources, including farmers’ contributions. This does not count additional economic impacts at the local level!

Recognizing these benefits, Governor Rendell’s proposed budget maintains REAP’s statewide budget cap at the original level of $10 million and specifically identifies the program as a critical element in the Commonwealth’s two year milestone to meet Chesapeake Bay requirements.

Reducing pollution to our local waterways and to the Bay is required by law. It is not an option. If cost effective agricultural measures are not implemented at sufficient levels, much more costly requirements will be imposed on wastewater system ratepayers, municipalities, businesses and homeowners. Future growth in many areas will also be limited if nutrients are not reduced.

REAP provides low cost water quality improvements and immediate, direct economic stimulus for local farm equipment dealers and contractors statewide. REAP also provides help to farmers during the current crisis driven by historically low milk prices. Please help ensure that $10 million in REAP tax credits are funded again during 2009-10.