[T]he Vermont House on Thursday unanimously approved an increased penalty on landowners who choose to develop land enrolled in the state’s current use program.
The current use program offers tax breaks to property owners who preserve their land for forestry or agricultural production. Municipalities are reimbursed by the state for the lost tax revenue, and no money is paid into the state education fund on property in the program.
Lawmakers approved a change to the program that will increase the penalty property owners pay for taking their land out of the program. Under H.272, the proposed change of use tax is expected to raise about $1.4 million in fiscal year 2016, about $900,000 for the education fund and $500,000 for municipal property taxes, according to the Legislature’s Joint Fiscal Office.
“We’ve been trying to put the teeth back in the penalty to make current use more sustainable,” said Rep. Alison Clarkson, D-Woodstock, who presented the bill to the House on Thursday.
For years, a coalition of foresters, farmers, conservationists and sportsmen have been trying to increase the penalty. The program is credited with supporting Vermont’s working land economy, but has frequently come under attack in an effort to shore up state revenue.
Currently, when land is taken out of the program and sold for development, the property owner pays 10 percent fair market value on the amount of land taken out of current use. If only a section of the land is developed — not the entire lot enrolled in current use — then the tax is pro-rated on just the portion of land removed from the program.
The new proposal would require an appraiser to assess the full fair market value of the parcel removed from the program. The purpose of the provision is to increase the amount a property owner pays to the state for removing their land from current use, some of which would go to municipalities to pay for town listers’ assessments.
There would be a three-month “easy out” for current enrollees with no additional penalty.
At the start of the legislative biennium, the Shumlin administration proposed a three-year moratorium on new enrollees and a 30 percent fair market value tax to help close the growing $113 million budget gap for FY 2016.
The proposal raised $1.6 million, but Ways and Means will make up the $200,000 difference in their proposal elsewhere, Clarkson said.
Last year, landowners saved $14 million by enrolling their land, according to the tax department, which cost the education fund $45 million in potential property tax revenue. But proponents of the program say these savings generate billions for the state through the working lands initiative.
The change would take effect July 1. The bill still needs final approval in the House before moving to the Senate.
