By PAULA TRACY, InDepthNH.org

CONCORD – For North Country towns facing a loss of revenue from the state’s timber tax due to a change in the way timber land owners can make money, the House passed a bill Thursday that would allow municipalities to collect a tax on standing wood and timber on land used for carbon sequestration.

But it faces an uncertain future in the Senate.

Opponents called it a “new tax” while supporters said it simply closes a loophole in the timber tax created by the advent of carbon credit programs, like that in California which allow corporations to pay timberland owners to grow trees rather than cut them.

After an attempt to table the vote failed, the House passed HB 123 on a vote of 197 in favor and 158 opposed.

The bill came out of the House Municipal and County Government Committee on an 18-0 recommendation of ought to pass despite opposition from the Business and Industry Association, the New Hampshire Timberland Owners Association, Americans for Prosperity and others who claimed this bill creates a new tax.

But supporters said the Governor and members of the Executive Council want to see this bill pass along with county and municipal government officials who said their property owners stand to lose revenue that traditionally has helped relieve taxes.

The bill was brought by Rep. Arnold Davis, R-Berlin, he said, to address lost town and county timber tax revenues that are being encountered on parcels of land, such as the 146,000-acre Connecticut Lakes Headwaters tract at the very northern tip of the state.

He told the House this is not a new tax and will be part of a 76-year-old yield tax on timber which he asserts is constitutionally permitted.

The largest privately owned tract in the state, located primarily in Pittsburg, has been enrolled in the California carbon compliance market since 2013. 

Timber taxes, which used to go to the towns have been diminished because the owner, Aurora Sustainable Lands, is paid to keep trees growing instead of cutting them on the California carbon compliance market. They are still cutting trees, but fewer of them. They are subject to a conservation easement that looks for them to cut and keep the land open for traditional uses.

The bill would expand the timber tax law in RSA 79:3 to add a provision that would allow for taxation of standing trees and also provides some other parameters with regards to the carbon sequestration of timber.

It would not impact timber stands that are not enrolled in carbon programs.

Rep. Jason Osborne, R-Auburn, moved to lay it on the table and explained that the state Department of Revenue Administration is working on matters related to carbon sequestration and that it would be worthwhile to delay a vote.

“I don’t want to see this bill go down today on such an important issue that we do need to address,” Osborne said.

After the table measure failed, state Rep. Len Turcotte, R-Barrington, called it a “new tax” and urged to kill it.

In her committee report, Chairman Diane Pauer, R-Brookline, said she did not agree.

“This legislation before us involves the timber tax which we already have. It is assessed when timber is cut for sale. It’s a yield tax. It is not a new tax. In my mind it is very clear that it is a new way to sell timber. Therefore, it is appropriate.”

Pauer also added “this is an important issue. It is a new issue that the states need to address through legislation and through policy.”

She said last year, the legislature agreed to a first bill on the subject which creates a mandatory registry of all properties enrolled in carbon programs and that is now up and available for viewing by the public with fewer than a dozen tracts of land listed.

She said because “timber is being locked up” it is greatly affecting the timber industry and municipal revenues.

“We need to address this here and now and not kick this can down the road any further,” Pauer stressed.

Bill Ardinger, attorney for Aurora Sustainable Lands said that the version of HB 123 that was considered by the House today “is fundamentally flawed both constitutionally and technically. We are committed to collaborating with all stakeholders to develop a solution that is not only appropriate and constitutional but also enduring and effective.”