A coalition of lawmakers and land conservation groups has spent the last six years trying to reform the Current Use land tax program. Over the weekend, as the Legislature came to a close, they finally succeeded.
Some lawmakers, however, say the changes could deal a heavy blow to longtime farming families.
Lamoille Sen. Rich Westman is a 30-year veteran of the Statehouse. His reputation as a level-headed negotiator has earned him assignments on key committees, even though he’s a longtime Republican in a building ruled by Democrats.
So it was out of character for Westman last week when he abruptly left an exclusive six-person committee of conference that was deciding how to raise $30 million in new revenues. He would never return to the negotiating table. And it was all over a revision to the Current Use program that is expected to generate less than $1 million a year.
“From the bottom of my heart, it’s the wrong direction to go with the program,” Westman says.
Current Use is a program that offers lower tax rates to people who keep their land in agriculture or forestry. Many, however, fear the program is too easily exploited, and lawmakers and conservationists want to keep property owners from enrolling land solely so they can take advantage of tax subsidies until they decide to develop it.
“The amount they’d pay in withdrawal penalties by parking their land in Current Use [under the old penalty structure] could pay off in a little as 220 days,” says Jamey Fidel, director of the Forest and Wildlife Program at the Vermont Natural Resources Council, a statewide environmental group. “This now increases it so the payoff time is more like seven years.”
Fidel says the reforms solve the problem by ramping up financial penalties on people who withdraw portions of land they have in current use.
Westman, however, says many farmers will become collateral damage in the crackdown on scheming developers.
“A lot of old farm families that don’t have a lot of money, they only have their land,” Westman says. “And a lot of those people when they get to retirement, the only thing they can do is sell a lot or two.”
By cashing out land on as-needed basis, Westman says cash-poor farmers can have a dignified retirement on the land they dedicated their lives to. He says they would already pay a significant capital gains tax, since the land has in most cases risen in value dramatically in the decades since they bought it.
The prospect of tens of thousands of dollars in added withdrawal penalties imperil that retirement. And he says it violates a compact the state made with people who might have otherwise reconsidered financial decisions made during their careers in agriculture.
Michael Snyder, commissioner of Forest, Parks and Recreation, says the plan includes an “easy out” provision that will allow landowners a short window during which they can withdraw land from the program without suffering the increased penalty. Even under the new penalty structure, Snyder says longtime Current Use enrollees will end up well in the black.
“I think the key here is to understand that they will have also benefited tremendously for a long time,” Snyder says.
Fidel says there’s already a hardship provision existing law to address the scenarios Westman fears.
Westman, however, insists it’s a raw deal for a community that deserves better.
“Well, I can understand increasing the penalty for people who have been in the program for say less than a decade … But as you go out into the future, the people that have done everything we want, we shouldn’t be tagging them,” Westman says.
The bill also calls for a study to see whether Vermont has enough foresters to oversee and manage its woodlands, and will increase tax audits to ensure municipalities are assigning appropriate assessments to land enrolled in Current Use.
This story was edited at 11:31 a.m. on 5/19/15