Integrity of current use program vital to its success, stakeholders say

Without the state’s current use tax program, “Vermont probably wouldn’t have a working landscape,” says a former president of the Vermont Land Trust.

Darby Bradley opened a panel discussion on the state’s current use program Tuesday with a short speech about the impact of the tax break for owners of forest and farmland on the state’s aesthetic and rural identity.

The Use Value Appraisal Program, known as “current use,” allows land in forest or agricultural to be taxed at a lower value than developed lands. Established in the late 1970s, the program aims to slow development and encourage farm and forest land use.

Tuesday’s panel discussion was part of the second annual Summit on the Future of Vermont’s Working Landscape at Vermont Technical College in Randolph Center, where hundreds of entrepreneurs, policy makers, business owners and community members convened to discuss the state of agriculture, food and forestry industries in Vermont.

Bradley and fellow panelists — Sen. Tim Ashe, D/P-Chittenden, Jane Clifford of Green Mountain Dairy Farmers Cooperative, Putnam Blodgett of the Vermont Woodlands Association and Tom Vickery of the Vermont Assessors and Listers Association — helped explain the law and discussed possible changes that could come under consideration in the 2014 legislative session.

A bill that passed the House last year increases the penalty for property owners who take land out of current use. This change aims to deter the practice of “parking” land — enrolling property in the current use program for a short time with the intention of withdrawing and developing it.

Current use policy must strike a delicate balance, Bradley said, given that fewer than 5 percent of Vermonters have land enrolled in the program. Landowners must feel that the taxes are affordable enough to keep the land undeveloped, and taxpayers must feel that the program is well-managed.

“While there is strong support for the working landscape among the other 95 percent of taxpayers, they are also taxpayers, and many of them have trouble paying their bills,” Bradley said. “If current use is perceived as a tax shelter for the wealthy, or is misused in ways, then I think support for current use will erode over time.”

CHANGES TO CURRENT USE

Ashe, chair of the Senate Finance Committee, detailed several current use reforms the Senate will take up next session. He and lawmakers from the Senate Agriculture, Natural Resources and Finance committees conducted a series of public meetings around the state this fall to gather input on current use policy. Ashe said the group will release a draft of proposed current use reforms within the next few weeks, holding one last public hearing in mid-January before taking it to the Senate.

Sen. Tim Ashe, D/P-Chittenden, spoke during a legislative panel discussing future legislation on energy and efficiency at Renewable Energy Vermont’s annual conference and expo in Burlington on Tuesday. Photo by John Herrick/VTDigger

Sen. Tim Ashe, D/P-Chittenden. Photo by John Herrick/VTDigger

Ashe said the most controversial issue has been the House’s change of the current use withdrawal penalties. Views among Senate legislators range from those who feel that there is no “land-parking” problem, and that higher penalties would deter use of the program, to those who feel that penalties should be high for everyone who wants to take their land out of the program. The group will attempt to reconcile these differences of opinion in their proposal.

Ashe said he and other legislators have also highlighted a lack of state oversight on agricultural land use within the program due to understaffing and high enrollment. While current use enrollees were once expected to confirm that their land was still in agricultural use every few years, Ashe said that is no longer happening with the same rigor.

“We need to maintain the integrity of (the program), to make sure that people are still following through with the practices for which they enrolled in the first place,” Ashe said.

He noted that county foresters, who oversee all of the forest land in the program, have also faced increasing workloads. Vermont’s 14 county foresters are now expected to oversee some 2 million acres of land.

“We’ve had extremely significant growth without any change in the number of county foresters,” Ashe said. “It’s clear that we need to be thinking about whether they can possibly do the right due diligence when their workload has grown so much.”

Ashe said constituents and lawmakers alike have expressed concerns that town listers appraise land at a higher value in order to bring in higher payments from the state. He expects the proposal to include a biannual audit of current use land, with the help of a third-party appraiser.

In response, Vickery, of the listers association, said one of the main problems with property assessment in Vermont is that town listers typically have limited training and serve on a volunteer basis. Towns, he said, can rarely afford to pay for additional training, so property values are not always consistent from one town to the next.

“Appraisal is not being taught,” he said. “We need a better system.”

Ashe said beyond overseeing property value, the biannual assessment would also ensure that agricultural lands enrolled in the program are still in use.

Overall, Ashe said, the reforms aim to make the current use program as effective as possible.

“For each anecdotal abuse that people hear about, it undermines confidence in the whole program,” Ashe said.

SUPPORT FROM LANDOWNERS

Jane Clifford spoke for Green Mountain Dairy Farms, a coalition of farmers who are members of dairy cooperatives. She also spoke as a dairy farmer with both agricultural and forest land enrolled in the current use program — she and her husband run Clifford Farm, an eighth-generation dairy farm in Starksboro.

“Land is our livelihood,” Clifford said. “We grow our crops, we raise animals, we manage it. We are stewards of the land.”

Since current use was established, agriculture in the state has changed — there are fewer than 900 dairy farmers today, though dairy still dominates the state’s agricultural revenue. Through the years, Clifford said the program has remained valuable for farmers with high property taxes.

“Our farm would have a very challenging time trying to dairy without a use value program,” she said.

Putnam Blodgett noted that he has long been a tree farmer but also was a dairy farmer for many years. Before current use was passed in 1978, he said, he would cut his best trees each year to gather enough cash to pay property taxes, which he said was not a sustainable system of forest management. Now, those with forest land enrolled in the current use program must have a forest management plan that is overseen by county foresters.

To him, current use makes sense for a state with an interest in keeping farm and forest land active.

“Why would we tax land on the basis of what it might be worth if developed?” Blodgett asked. “Farm and forest lands do not earn enough per acre to pay developed taxes.”

Though the state might appear to be losing out on property taxes, Blodgett said, current use has financial benefits in other areas of the system, like tourism.

“How may leaf peepers would come here if there were no trees?” he said.

A CALL TO ACTION

Bradley emphasized that there is widespread support in the state for agriculture and forestry and, in turn, the current use program. But he noted that loopholes and misuses of the system only serve to weaken the program’s image overall, and urged support for legislation that would reform and strengthen the program.

“The time to fix problems is when we have supporters in the majority,” he said. “We need action on this.”

Comments

  1. Paul Lorenzini :

    How many wineries get current use tax discounts?
    I’m fine with dairy farmers getting a break but people wealthy enough to make a product for other wealthy people should be excluded.
    This is the problem with every tax break law, wealthy people have attorneys and accountants to find the loopholes and weaknesses and use them to their advantage.
    By the way, leaf peepers came here when there was a lot more open pasture. The trees they come to see are in the mountains and there are a lot more trees there now then there was 60 years ago.
    Wasn’t it called land use a few years ago?
    Why the name change?
    To manipulate perception?

    And thank you digger for revealing how poorly the program is controlled, like many government programs that others have to pay for. Maybe if the government focused on fixing the programs they have, instead of making new ones, we would have laws that make sense. It seems as though our leaders are always more concerned with making the next law instead of monitoring the ones they already have. The endless excuse of not enough money to monitor the program rings very hollow in my ears. There isn’t enough money in the world for a progressive government who want’s more laws, more employees, and more of the taxpayers money.

    • Matt Miller :

      Wealthy people drink milk and eat cheese, too.

      Do you want to exclude all “organic” farmers because only wealthy people can afford organic food?

      I don’t think that subjectively deciding who is rich (or even worse, who produces “rich person” products) and who is not rich should have anything to do with land use classification.

  2. James Maroney :

    Conventional farming was designed to drive production up, which is driving farm prices and incomes down which is what is driving farm attrition and lake pollution. This is not rocket science. If the state wants to preserve farm land and clean up the lake (it spends $12M/year trying and filing to do that), and 97% of respondents to the Survey on the Future of Vermont said they support agriculture, then the state must make the receipt of tax benefits, which are paid by those same Vermonters, contingent upon farming sustainably. Otherwise, Vermont is feeding with one hand the problem it believes itself to be legislating against with the other.

  3. Mike gardner :

    This is insane. The data proves that the biggest abusers of current use are the towns!

    In most towns, especially those that don’t have professional appraisals, the land value in current use is inflated so the towns get a bigger rebate from the general fund. The landowner won’t grieve the assesment because their taxes aren’t affected by the overvaluation. Towns know this and abuse it on a regular basis.

    If you want to “solve” this problem require all towns to have a professional appraisal and get rid of town listers. There is no reason in this day and age that Vermont can’t offer a statewide appraisal system to eliminate the B.S. cronyism that exists with small town appraisals. Either certify private appraisal firms to compete for town reappraisal contracts or contract with a firm on a revolving basis to do the work.

    Everyone should be held to the same standard. It would also clean up the disaster that revolves around the common level of appraisal and the statewide education property tax.

  4. Kathy Nelson :

    Let’s talk about wealthy out of state landowners who pose as big time loggers or hire a less than reputable logger as a cover for their land use operations. Let’s say that the landowner, who is getting a reduction in his taxes through current use, tells his loggers to create extra-wide “logging” roads and accesses across his ridgeline land. He can get away with this because there are no guidelines under current use or Act 250 about how wide and permanent logging roads can be. So, while this make-believe logging is going on, the landowner has signed a lease for his 9,000 acres to an industrial wind developer. The lease includes the entire 9,000 acres. Why hasn’t the current use been revoked? Why wasn’t the current use revoked when it was clear that the landowner was misusing current use to start pre-development of roads for an industrial wind project? Why wasn’t another adjoining landowner fined when he dropped his current use, under the guise of logging, to provide access for the wind developer the owner of the 9,000 acres leased his land to?
    Then, to make matters even uglier, the owner of the 9,000 acres screams property rights! when the towns his lands are in make it clear the landowner is in violation of zoning and town plan restriction (which are the same for everyone). Now the big landowner, who is making money from his big lease to the wind developers, wants the state, via the PSB, to override the rules and will of the the towns to give him a permit to make more money while doing irreparable harm to an entire region.
    Does anyone see the point I am trying to make here? Because Montpelier just doesn’t seem to get it.

  5. Bill Guenther :

    Just wanted to point out that Vermont has only 13 County Forester positions and just in the last month the 13th was added. For several years all of the Use Value Appraisal forestry work was handled by just 12 County Foresters.

    The term “land Use” is really a slang term for this program which is actually called either Use Value Appraisal or Current Use.

  6. Steven Farnham :

    In the old days, land was taxed according to the value of its use. To tax land as if it was developed when, clearly, it was not, would have been considered an anathema to equal and fair taxation.

    Somewhere along the way (the Hoff administration, perhaps?) Someone decided to tax land by its “highest and best” (potential) use. Don’t know who gets to define “highest and best,” but it sure isn’t farmers.

    If we taxed homes this way, a guy in a trailer with ten acres and a great view would receive the same tax bill as he would if he lived in a 5000-square-foot marble castle. Then the state would agree to reduce the tax back to something appropriate to the trailer, if the guy agreed to certain “lifestyle management” handed down from the state.

    The general population would never tolerate this, but since farmers (landowners) are outnumbered in the general population by about 500 to one, there is no audible objection to a tax policy that effectively forces landowners to use their land according to the dictates of the state – or more likely, according to the lobbying efforts of the logging industry.

    Rich landowners can pay the higher tax rate, and do what they want to with their land, while poor landowners (to qualify for a fair tax) have to comply with the state’s dictates. And of course, as mentioned above, there are plenty of rich people that get both: They do what they want to with their land AND they get the lower tax rate.

    People who are staggering under the crushing burden of taxes view tax “breaks” to others with understandable suspicion, and since current use is widely believed to be a “tax break,” backlash against it is also understandable. It is not a tax break, nor is it a subsidy – at least not to landowners. If current use is a subsidy for anyone, it is a subsidy for the forestry and logging industry – in particular, timber companies that own large swaths of timberland.

    If you want to tax the rich – then tax the rich. If you want to tax large timber companies, then tax large timber companies. Over-taxing large tracts of land and then trying to reduce the bill for low-income property owners is unwieldy, unmanageable, and obtuse – so of course – that’s how the state does it. It’s not Democracy – it’s bureaucracy with all its ugly and expensive trappings.

    The conversation has been so perverted for so long now that, taxing land that is not developed as if it is, has become the normal, and taxing land according to its actual use is viewed as some kind of heresy – a Kafkaesque, Orwellian circumstance if there ever was one.

  7. Jim Barrett :

    Land use tax breaks are supported by those landowners who want someone else to pay for their property. This program has been used for years by landowners to stop production and then a few years later they are paid to produce. A giant ponzu scheme and it will not be stopped, improved or monitored because it means votes for the politicians. Just another tax ripoff that the poor Vermonter is FORCED to pay for by your friendly, smiling politician.

    • Steven Farnham :

      Yes, Jim. Taxing land at its actual value at this time is a Ponzi scheme. How clever of you to observe this.

      • Jim Barrett :

        i don’t think any land should be taxed on the basis of what it would bring for say a development when no permits have been issued. Many potential building lots never happen because of zoning restrictions and new restrictive laws being passed in many towns each year. I agree that land should be taxed on its present use. As far as land in so called conservation , our taxes being used to pay someone not to produce and in many cases to produce later on is a total waste of our tax dollars. Many years ago someone could buy a tract of land and the payments from the government (you) would nearly cover the payments.

        • Matt Miller :

          How are our taxes being used to pay a landowner not to “produce”?

          Large landowners may pay less per acre than you in taxes, but it’s not like they’re collecting checks made up of your tax dollars.

  8. Moshe Braner :

    The real problem is the concept of “property taxes” in the first place. It should be abolished altogether. Tax actual income, not theoretical potential future income if the property were to be sold and “developed”.

    How would you like your income to be taxed based on the income from a job you “could” have had instead of the one you actually have, if any? The only reason “property taxes” are still used is because they are regressive, i.e., benefit the rich, since the portion of income directed towards the taxed property (real estate) is on the average lower among the rich, even though the absolute value of their property is higher.

    That is why “income sensitivity” was the political solution to the education tax, as it helps out somewhat those with lower income but still leaves the very rich paying less than their fair share relative to their income.

  9. David Brynn :

    Taxing land on the basis of its potential use is absurd. This potential use taxation forces ‘unwealthy’ landowners to sell, develop or otherwise exploit their farms and forests in ways that compromise water quality, biological diversity, and even air quality. Use value appraisal helps to address this.

    The Current Use Program is not perfect. For example, the program should focus much less on how landowners manage THEIR timber and cows and much more on the impacts their management has on OUR commonly-held assets — water, air, and critters.

    Also, taxing healthy, undeveloped land is a mighty foolish way to raise revenues to pay for government. After curbing unnecessary government, it would be far better to either tax income and/or to charge fees for pollution in order to cover essential services.

    None of this will be simple. It will require visionary leadership capable of ‘triple top line’ thinking.

Comments

*

Comment policy Privacy policy
Thanks for reporting an error with the story, "Integrity of current use program vital to its success, stakeholders s..."