“A deal’s a deal,” says Rep. Wes McKinley of Walsh. The Democrat is sponsoring a bill to ensure that the state lives up to its end of a bargain regarding conservation easement agreements made prior to 2008. But the state is suffering from some sticker shock, as those agreements now have a $170 million price tag, in the midst of a recession-driven budget slump.
“It’s like changing the rules in the middle of a ball game—you can’t do it,” said McKinley. “My bill says we (the state) made a deal. We’re going to honor it.”
Conservation easements became available in 1999, allowing property owners to receive a tax credit for donating a portion of their property to a government entity or approved conservation group to preserve the land in perpetuity and stave off development. When an easement is created, an appraisal is done to determine the market value of the land, and the tax credit is based on that appraisal. Critics of the program now say some of those appraisals were not accurate, and the state is demanding money back from property owners who may have wrongly benefited.
House Bill 1169 would require the state to honor the appraisals accepted before 2008 regardless of the newer guidelines. Sen. Ken Kester, R-Las Animas–whose vast, southeastern Colorado district includes numerous property owners who have benefited from the easements, said the state’s attempt to roll back such tax relief is both distressing and wrong.
“We can’t go back and retroactively take the money from the people that in good faith sold these conservation easements,” said Kester.
While the debate goes on over the contracts of the past, another bill would limit benefits where future easements are concerned. House Bill 1197 seeks to cap funding for the credits at $26 million total and to dispense those limited funds to easement holders on a first-come, first-served basis.
Those who enter into a conservation agreement this year will be subject to the more stringent guidelines enacted after 2008 and will have to act quickly if HB 1197 passes as expected. For tax years 2011-13, when the credit program will be limited to a total of $26 million a year, the state will save $37 million that it would otherwise be obligated to return to the landowners as credits during those years.
McKinley’s bill has already garnered the support of House Speaker Terrance Carroll, D-Denver, who is listed as a sponsor on the bill, but it is still waiting to be heard by the House Finance Committee. Meanwhile, HB 1197 has already been considered and approved by the full House and by the Senate Finance and Appropriations committees. It is now waiting to go before the full Senate.
McKinley said he’s counting on the House Finance Committee to uphold the commitment he believes the state has already made to affected landowners.
“The thing that we’re always told up here at the Capitol is that your word is your bond, and I actually believe that – I live by that—and I think the state should too,” said McKinley.