The House and Senate agriculture committees are gearing up for a showdown over changes to the state’s flagship land conservation program.
A special study committee chaired by Sen. Bobby Starr, D-Essex/Orleans, struck all the language from a bill that passed the House in 2013, sponsored by Rep. Alison Clarkson, D-Woodstock, and five others. The Senate version — still a rough draft — was discussed at the Statehouse on Tuesday evening at the fifth and final in a series of public hearings.
The Senate version tweaks some of the House provisions, leaves others behind and introduces new mechanisms for managing the nearly 2.37 million acres enrolled in Current Use at a cost of about $57 million in 2013.
Chief among the changes are a proposed cap on tax benefits that landowners could claim for keeping their land as working farms and forests.
Known also as Use Value Appraisal, the Current Use program’s special tax structure charges less property tax for land used for forestry or agriculture. The property taxes are lower because the land is valued for its current “use” rather than its current fair market value.
In tax year 2014, to begin April 1, forest land will be valued between $89 and $118 per acre — down a dollar from up to $119 in 2013. Agricultural land will be valued at $279 per acre, up $14 from the current year.
Lower tax bills are intended to make it more affordable for landowners to keep their property as part of Vermont’s “working landscape” — as opposed to cashing in on development rights.
But as pressure mounts on the state’s education fund, the “cost” of Current Use is coming under closer scrutiny: Even proponents wonder if the system could work better.
Some say the program is being manipulated by landowners to receive temporary tax breaks. Others fear that making it harder — or more expensive — to pull land out of the program would unfairly penalize land-rich, cash-poor families who deserve the right to sell their property at will.
The cap
The Senate study committee’s proposal to cap benefits stops short of suggesting what their upper limit should be. The draft bill simply used a placeholder:
“The benefit of the use value appraisal … shall not exceed [$X,XXX] per acre per parcel,” it reads.
Currently, the state simply waives the difference between taxes on a property’s fair market value (FMV) and use value appraisal (UVA).
But the senators on the study committee are suggesting the state should only waive the difference to a certain point. The landowners would then owe whatever taxes — if any — the state doesn’t waive.
Sen. Richard Westman, R-Lamoille, said in an interview Wednesday that the cap is an effort to discourage a pattern of subdivision that ends up costing the state more for the same amount of enrolled land.
To illustrate the aim, Westman offered an example of one 100-acre lot that is split into three 33-acre parcels. The three parcels combined add up to more value than the 100-acre parcel alone.
The subdivision, therefore, drives up not just the value of the acreage, but also the amount in property taxes the state waives for keeping the multiple parcels in Current Use.
“That’s part of what’s driving up the cost of the program,” Westman said. He thinks setting a cap on the amount per-acre the state was willing to waive would discourage this type of subdivision, and therefore help curb Current Use’s costs.
“Chances are, a big lot would never hit the cap if we set it high enough,” Westman said.
But the proposal was met with skepticism Tuesday night, with several witnesses fearing the cap would inadvertently encourage development.
“In towns with high property values, this would increase the pressure to develop,” said Putnam “Put” Blodgett, a woodsman long active with the Vermont Natural Resources Council, the New England Forestry Foundation and the Vermont Woodlands Association, among other groups.
Jamey Fidel, forest and wildlife program director for the Vermont Natural Resources Council, added that the cap could create a slippery slope.
“If you put that in, there’s temptation over the years that you will tweak the number that’s in there,” Fidel said.
Ed Larson, a consulting forester for more than two decades, said instituting such a change to the formula could constitute a big blow for owners of high-value properties. He asked the committee to consider ways to “soften the landing” if they choose this path, or to consider grandfathering land that’s currently enrolled.
Background and more debate
The cycle of scrutiny with Current Use is not new. Established in 1980, related statutes have been amended many times. Most notably, the Legislature voted in about 2001 to effectively dilute the penalty — known as a “land use change tax” — for pulling land out of Current Use.
The Legislature voted to restore harsher penalties in 2010, but the bill was vetoed by then-Gov. Jim Douglas.
The changes being debated now revisit many of the same issues. At the Senate’s special study committee public hearing Tuesday evening, response was mixed.
“This bill is the first thing I’ve seen written from the perspective of people who are supposed to benefit from the program,” said Carl Russell, a board member of the advocacy group Rural Vermont, a farm and forest owner and also a forestry consultant.
In commending the committee, though, he wasn’t optimistic about the fate of their work. “This bill makes so much sense it probably isn’t going to work in this building,” Russell said.
Blodgett was less impressed. The House version represented a hard-won consensus within the Current Use Tax Coalition, Blodgett said. CUTC is a group of 17 organizations that rallied several years ago to find common ground on Current Use.
“This (consensus) has been completely ignored,” Blodgett said of the Senate proposal. Blodgett welcomed other provisions, however.
He and several witnesses praised the idea of the state’s Property Valuation and Review office auditing 10 towns each year for their administration of Current Use. The provision is intended to stem inconsistent property valuations among listers — stories of which spur suspicions that some towns are manipulating the program at the state’s expense.
Channeling more money into the Department of Forest, Parks and Recreation for county foresters was also a popular addition to the draft bill. Public hearings last fall brought scores of complaints that foresters have so much paperwork to manage they can scarcely get out to visit forests.
The Senate committee also proposed more oversight of the agricultural aspect of Current Use. Currently, landowners only need to submit management plans for forest land.
Many witnesses also were intrigued by the committee’s proposal to establish a “floating” two-acre exemption from enrollment. That provision would let landowners reserve two acres of a parcel for future development without facing a penalty. The two acres would be appraised at fair market value.
