THE SPONSOR REPLIES

As the sponsor of the bill highlighted in last week’s edition of the Phoenix (see "Last-Minute Relief," by Lance Tapley, July 1), I wanted to provide some insights to the process undertaken to move this bill from a good idea to a law. I was away from home on vacation and unable to return Tapley’s calls until I returned — a day after the article had been printed. I appreciate the earnest attempt to reach me.

LD 1305 is an off-shoot from legislation passed in the ’03-’04 session of the Legislature that was commonly called the "Liquidation Harvesting Bill." That bill, which emanated from the Agriculture, Conservation, and Forestry Committee, and was sponsored by the Department of Conservation, moved through one of two large multi-disciplinary working groups managed by the Department. One group dealt with the need for laws to facilitate the rule-making process to control liquidation harvesting. This was a priority of Governor Baldacci. That legislation moved through the legislative process and rules were generated for liquidation harvesting (the practice of buying up forest land, quickly removing most of the commercial value of trees, and subsequently re-selling the property) in ’04.

Importantly, and perhaps unknown to the author of your article, the second large working group was tasked with creating non-regulatory "complimentary solutions" to the barriers of long-term forest landownership in Maine. Because this was a different approach, it took longer for innovative ideas to get fleshed out. One of the best ideas stemming from this committee eventually became LD 1305. The concept was to reward landowners if they kept and managed their land very well for a very long time. It was agreed that although the idea was worthwhile and creative, it would need more time to be put into a workable legislative document and the process was "carried over" until this current (’05) legislative session. Mr. Peter Triandafillou, a well-respected forester and leader of the Huber Forest Resources Group, agreed to draft up the language. As one of three foresters in the Legislature and having just served on the LD 1 Joint Select Committee on Property Tax Reform, and not having any other bills under my sponsorship, I was asked to be the sponsor of the bill.

I presented the bill at the public hearing, worked and re-worked it in two work sessions with the Legislature’s Standing Committee on Taxation, and when completed, it received a 10-2 vote out of that committee and then went to the floor of the House. The majority report (the 10 votes) was offered on the floor and nobody debated it. The same thing happened in the Senate. It went under the hammer. This obviously gives the sponsor a sense that the bill is a good one — and I was pleased to see that. That process is repeated a total of three times to give additional opportunity for debate or floor amendments, and each time, LD 1305 went through the process without debate.

Then it was moved to the Appropriations Table from the Senate — appropriately so. I worked with each member of the Appropriations Committee to explain the purpose of the bill, and I was pleased that it was one of the few bills that came off that table on the last day of the session and was sent to the Governor for signature. It goes without saying that any legislation can be adjusted by any future Legislature and we should certainly be open to making constructive changes to any legislation as we go forward.

A great feature of LD 1305 is that it provides tax relief only if the landowner performs over a long period of time. Benefits are very minimal if, for instance, a landowner kept and managed their forest well for only 10 years and then re-sold it. That benefit would be 6.5 percent of the roughly eight percent capital gains tax — not very much. For instance if you gained $50,000 on the sale of your well-managed parcel of forestland after 10 years, you would receive a capital gains tax reduction of approximately $260. But if the owner performs excellent forestry for 25 years or longer, the entire eight percent of capital gains tax at the time of sale would be waived. For instance, the same sale occurring in 25 years with a gain now of perhaps $150,000 would get a full waiver of the $8000 gains tax — a much stronger incentive. This methodology creates a strong incentive to keep lands in continual ownership and to practice excellent forestry — both worthy goals for our state. It is non-regulatory, innovative, and provides genuine tax-reform opportunities for the many thousands of small, medium, and large landowners in Maine — the most heavily forested state in the nation — while helping to meet the public’s general wishes to reduce sprawl and keep blocks of forestland intact.

Patrick S. A. Flood, State Representative — District 82, Winthrop and Readfield

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