The Chesapeake Bay Foundation is promoting a recently introduced legislative proposal that would give tax credits to farmers and businesses that sponsor farm projects to help reduce water pollution across Pennsylvania.

These credits would help farmers install proven water pollution control practices while remaining profitable.

CBF will be kicking off public promotion of the legislation to the farming community and the general public at this year’s Ag Progress Days held in State College.

The bipartisan Resource Enhancement and Protection Act of Pennsylvania (REAP) would provide unprecedented assistance to farmers in the form of state tax credits to install best management practices to reduce water pollution.

The proposal was introduced as Senate Bill 1286 by Sen. Noah Wenger (R-Lancaster), Sen. Mike Waugh (R-York) and Sen. Michael O’Pake (D-Berks) and as House Bill 2878 by Rep. Jerry Stern (R-Blair), Rep. Art Hershey (R-Chester) and Rep. Peter Daley (D-Washington) and others.

“Farmers have long recognized the need to be good stewards of the land, but to be good stewards farmers need the right tools and the funding to improve their operations,” said CBF’s Pennsylvania Executive Director Matt Ehrhart. “This unique program would be the first of its kind in the country to provide farmers transferable tax credits for installing best management practices to reduce pollution and sediments coming from farms.”

The bills provide personal and business state tax credits ranging from 25 to 75 percent of the cost to install best management practices like barnyard improvements, riparian buffers, stream fencing and other practices. The development of manure management plans on farmlands, and forested buffers on non-farm lands, would also be eligible for credit.

“The program gives higher tax credits for those BMPs that provide the greatest benefit to our water quality, wildlife and fisheries—practices that provide the biggest bang for the buck,” said Ehrhart. “This prioritization is critical because the demand for financial assistance under traditional conservation programs far exceeds available funds from either the state or federal government.”

“Strengthening the private sector’s role in promoting farm conservation is another key goal of the legislation,” said Ehrhart. “REAP creates a sponsorship program that allows businesses to sponsor projects on farms in exchange for tax credits in a way that minimizes the government’s role in the program.”

Applicants are eligible for tax credits up to a total of $150,000 over the life of the program. Businesses can sponsor an unlimited number of projects on farms.

To provide flexibility, tax credits under REAP may be sold by a taxpayer that does not have a tax liability of their own to another taxpayer that does. This allows farmers with minimal tax liability to participate in the program. Taxpayers can also roll tax credits forward to cover future tax liabilities for up to 15 years.

These and other features of REAP are based on the successful Educational Improvement and Research and Development Tax Credit Programs already enacted in Pennsylvania.

The legislation caps the number of tax credits that can be issued over the five year life of the program. The first year up to $50,000,000 can be issued and $100,000,000 in each of the successive four years. The Pennsylvania Department of Revenue would administer REAP as it does other tax credit programs.

“Finding new ways to help farm families deal with the financial squeeze of farming today is a challenge,” said Ehrhart. “This legislation provides farmers with new resources to improve the environment— a clear win for everyone—and we want to congratulate all the Senate and House sponsors for introducing this legislation.”

The REAP Program will help Pennsylvania meet its obligations under the 2000 Chesapeake Bay Agreement to reduce nutrient and sediment pollution going to the Chesapeake Bay by over 38 million pounds a year by 2010.

CBF will be speaking to the farming community about the legislation at Ag Progress Days, Pennsylvania’s largest outdoor agricultural exposition. Ag Progress Days are being held August 15 to 17 at Rock Springs, nine miles southwest of State College on PA Route 45.

For more information, visit the CBF Pennsylvania webpage or call 717-234-5550.

8/4/2006