The Legislative Post Audits Committee learned Sunday about the outdated way managed timberland is handled between the state tax department and forestry department. But that report led to questions from Senate President Craig Blair about how the state was handling carbon offset lands.
Carbon offset land is property the landowner agrees to keep undisturbed to offset carbon pollution elsewhere, likely out of state. The landowner is paid for that use.
Blair was told the state had just begun tracking that information.
“That’s why I was asking a year and a half ago for us to be getting that information so that we can manage it before it gets out of hand,” he said.
The state forestry department has about 4000 applications for managed forestry lands that now include a checkbox to indicate if the land is used for carbon offset. A representative from the forestry department promised to have the information to Blair in two weeks.
“If you lock down a property, forest property, for 99 years, and you can’t do anything with it, the likelihood of being California if it catches on fire, that is a big problem,” Blair said.
Blair continued to say that he wasn’t worried about the financial implications of carbon offset lands, except for the potential of fighting forest fires, but that tax money from lands used this way should go to the counties.
Mike Jones, the audit manager of the Post Audit Division explained that in 1990, the legislature passed the Managed Timberland Program Act that allows for West Virginia landowners to agree to sustainably manage timber in exchange for a very reduced property tax rate. It involves the Division of Forestry, which certifies property as managed timber, and the state tax department, that applies the appropriate property tax rate based on forestry certification.
Every year a landowner applies to forestry for certification of a parcel of property. Once certified, the tax department determines the appropriate tax valuation class for the property to provide to the county assessors.
The legislature adopted a rule in 1998 to further guide the program, but it hasn’t changed since. Jones said their review of the program revealed several weaknesses and areas which could be improved to produce better outcomes.
One concern was that landowners could be receiving a tax reduction from the property taxes while also receiving income from the carbon offset agreement. Without a database, the state cannot be assured that all property taxes are accurately assessed and paid or if there are landowners improperly receiving a reduced tax rate.
Currently, there are more than 600,000 acres of forest in West Virginia confirmed to be under a carbon capture agreement and approximately 2.6 million acres in the managed timberland program. With 54 counties having managed timberland properties under reduced tax rates, there could be significant potential for overlapping conflicting agreements that could result in the improper reduction of assessed property taxes.
To correct this, the Legislative Auditor suggests the legislature codify a requirement that carbon offset agreements be noted on the landowners deed within the county, as conservation easements on the property that exists potentially belong beyond the life of the current landowner and could preclude certain uses of the land, including the access to minerals or natural resources within that land.