Tax policies in the states surrounding the Chesapeake Bay can contribute to the better conservation practices promoted by the "Chesapeake 2000" agreement, according to a new report released by the Environmental Law Institute. Chesapeake 2000 Tax Policy Study offers an analysis of how tax policies in Maryland, Pennsylvania, and Virginia affect land use in the Chesapeake Bay watershed. The report analyzes state and local taxes and assesses how each state could improve upon its current tax policies and consider new ones that support the land use commitments.
In 2000, Maryland, Pennsylvania, Virginia, the District of Columbia, and the federal government signed the "Chesapeake 2000" agreement, pledging further actions to improve and sustain several areas of the Chesapeake Bay watershed with an emphasis on new land use commitments. The signatories committed to reduce the rate of sprawl in the watershed by 30 percent, to promote redevelopment by removing economic barriers to investment in underutilized communities, and to strengthen preservation programs and preserve 20 percent of the land area in the watershed. The U.S. EPA’s Chesapeake Bay Program came to ELI to fulfill yet another commitment of the agreement. The signatories agreed to review their tax policies to identify those that encourage undesirable growth, and then armed with this information, to modify such policies and create tax-based incentives that promote conservation of resource lands.Currently, some policies promote sprawl by discouraging use of older urban areas and encouraging municipal governments to chase after forms of development that increase local tax receipts. In addition, business tax incentives and exemptions that do not limit the location for development may lead to negative impacts on land use. Meanwhile, higher taxes in older jurisdictions lead to urban sprawl, since businesses prefer to build in non-developed areas with lower tax rates rather than reconstruct or retrofit in older areas.
Improvements recommended for all three states include fiscal impact analyses, which would examine the potential tax revenues, infrastructure, and service demands of differing patterns of development planning. Such analyses are useful in assisting governments in decisions about development plans and can advance understanding in land allocations for residential, commercial, mixed-use, and open space uses. The report also recommends consideration of several forms of local tax-base sharing, impact fees, and tax incentives for rehabilitation of older buildings and communities.
The Chesapeake Bay Program’s Land, Growth, and Stewardship Committee will consider the ELI recommendations this fall and will advise the states on reevaluating their tax policies and revitalizing them in accordance with the Chesapeake 2000 goals.
The full report is available at http://www.elistore.org/reports_detail.asp?ID=10894&topic=Conservation. For more information about this report contact Jim McElfish at 202-939-3840. For more information on the Environmental Law Institute, please visit our web site at http://www.eli.org.