New solar installations across rural North Carolina are threatening that state’s farmland. The North Carolina House Agriculture and Environment Committee approved a bill that would phase out the property-tax exclusion for solar companies, but not without a fiery discussion.
The Farmland Protection Act, HB 729, sponsored by Reps. Jimmy Dixon, R-Duplin; Julia Howard, R-Davie; and Dennis Riddell, R-Alamance, received a favorable report and was referred to the House Energy and Public Utilities Committee.
“This bill deals with the property-tax exclusion relative to solar facilities; we go to a phased-down approach,” said Dixon, introducing the bill. “There are two property taxable situations on solar: one is the land on which the solar facility exists. It is leased from someone who owns the land; that land is taxed separately from the facility. The facility is taxed as the facility; it gets an 80% exclusion up front for property taxes. This bill now proposes to phase that exclusion out beginning in 2026: they would pay property tax on 40%, the next year 60%, the next year 80%, and after four years it would go back to 0% and 0% exclusion.”
HB 729 is supported by the North Carolina Farm Bureau, North Carolina Grange, the North Carolina Association of County Commissioners, and North Carolina Department of Agriculture and Consumer Services (NCDA&CS) Commissioner Steve Troxler.
“We believe that this bill helps level the playing field for farmers competing with solar facilities for land purchases and land leases,” Stacy Sereno, legislative director for the North Carolina Farm Bureau, said before the committee. “We rise in support of the bill and thank you, Rep. Dixon, for bringing it forward. We urge your support.”
The American Farmland Trust ranks North Carolina No. 2 in the nation for the likelihood of farmland disappearance between now and 2040, according to Troxler. The Trust estimates that between 1.2 million and 1.6 million acres of farmland could be lost during this period.
“The people moving in, businesses moving in, and the solar development all share in that disappearance of farmland,” said Troxler during the committee meeting. “I am the biggest property-rights advocate you’re ever going to see. I’ve had hundreds of phone calls from people saying, ‘I’ve been offered a contract to put solar on my farm, what should I do?’ The answer is always going to be: ‘If you’ve got the deed to it, it’s your property; you need to do what’s right for you.’ That’s happened all across North Carolina because of government tax incentives that have put us in a really good position to become a national leader in software development.”
Troxler said that solar energy projects have already surpassed the amount of agricultural land that can be safeguarded under the current Farmland Preservation Trust Fund. This development underscores the need for a comprehensive reassessment of land use policy within the state. Agriculture is a pillar of North Carolina’s economy, contributing $111.1 billion annually.
“There will come a point when the balance of the disappearance of our natural resources overcomes our production capabilities,” continued Troxler. “That’s what this is about today.”
Rep. Keith Kidwell, R-Beaufort, said during the committee meeting that this is not a tax increase, as many have referred to the bill, but a tax equalization. Currently, a tax cut in place allows certain equipment, specifically solar equipment, to be taxed at a lower rate than other types of equipment commonly used on similar properties. Kidwell said that he’s heard from constituents and other lawmakers that this policy is expected to impact landowners, particularly in relation to their retirement plans and similar financial considerations, as solar energy companies may reduce the payments they offer. For landowners who have already signed contracts, unless a contract was really bad, this change will not impact those contracts. This measure is a tax equalization, not a tax cut or increase. Currently, taxes are assessed on only 20% of the asset’s value.
“This basically is government welfare; we are subsidizing the solar and wind industry through these tax cuts,” said Kidwell. “I’ll hear the argument that we subsidized other businesses; OK, let’s stop that, too. Let’s make everybody pay an equal amount of taxes because that’s what we’re supposed to do under the Constitution.”
According to Kidwell, the state legislature should not be involved in granting tax cuts to a business, especially when that business now produces a product that costs consumers more than alternatives such as nuclear power, natural gas, or hydroelectric energy.
“Solar costs more, and we’re subsidizing that to sell it for a higher price,” said Kidwell. “We’re subsidizing it through tax cuts, then selling it to the consumer at a higher rate. I will absolutely, Rep. Dixon, support you in this effort.”
Howard, one of the bill’s primary sponsors, conquered with Kidwell’s evaluation that this is corporate welfare.
“We’re walking the exemptions back over a several-year time frame, which allows everybody to know what is going to happen and where it’s going to go,” said Howard during the committee meeting. “We continue to do exclusions and exemptions for everybody; that’s your local county government that you’re going into, and actually just taking direct dollars out of their budgets. We’ve worked on this for a long time, looked at it for a long time, and I truly believe that this is a fair thing to do; we don’t subsidize all other industries. This gives the solar companies the opportunity to know what is going to happen in the future if we pass this bill.”
Rep. Blair Eddins, R-Wilkes, gave a real-life example of a fourth-generation farmer in Nash County who rents most of his land from a children’s home. Last year, the children’s home was approached by a solar company with an offer to take all their land and put in a solar farm; if that had happened, this farmer would have been gone.
Discussion continued with an exchange between Dixon, Howard, and Rep. Eric Ager, D-Buncombe, who opposes the bill.
Rep. Sarah Crawford, D-Wake, raised concerns that rolling back the tax breaks would disincentivize solar companies from coming to the land. Dixon emphasized that in his opinion, these solar companies will not leave the land, due to the fact that it is an “incredibly lucrative business.”
Finally, the discussion closed with several public commenters both for and against the bill.
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