Farmers: Expect higher taxes next year

Minnesota changes Green Acres law. Farmers will be charged penalties along with higher tax rates.

ISANTI COUNTY – Farmers are facing a significant tax increase next year.
Why? Because the state has changed its laws regarding Green Acres.
These changes go into effect immediately in 2009.
Farmers have the option of staying in the program or opting out. Either choice will come with a bill.
Whereas farmers could previously include land that was "non-productive" such as swampland and heavy woods if it was contiguous to farmland, they can no longer do so. That land must be taken out of the program, and a penalty paid. The payback amount will equal the average deferred taxes for the current year and two previous years times three. In addition, farmers will then be paying a higher tax rate on the land in the future, upping their total tax bill.
Farmers can choose to "grandfather" their non-productive acres into the new system to avoid the increased tax bill. However, this cannot be done without conditions, according to Isanti County Assessor Michelle Bolen.
If the land is ever withdrawn, sold, transferred or subdivided, the owner must pay back deferred taxes for the current year and two previous years times seven for all the land.
This means that if a person who owns 100 acres wants to divide off five acres to give to his/her daughter, the person must pay back the penalty on the entire 100 acres, not just the five acres.
Or, if the county wants to purchase right-of-way to widen a road, the landowner will be required to pay back the penalty.
"This doesn't seem quite fair," observed Isanti County Commissioner George Larson during the Sept. 3, 2008 county board meeting.
"We are taxing people out of their family farms," said Isanti County Commissioner Susan Morris. "My parents will not be able to hold onto their farm."
She expressed concern about how this will affect the open space the county is trying to preserve.
The market value used by the assessor on swampland is currently $2,000 an acre.
This market value is based on actual land sales, pointed out Bolen.
LANDOWNERS WILL BE NOTIFIED SOON
The county intends to send out letters notifying over 1,000 affected landowners of the changes in a few weeks. The assessor's office is now working on computing the approximate paybacks in order to answer that pressing question when landowners call. "Obviously, we are going to get inundated with phone calls after the letters go out," said Bolen.
"The payback issue will be the biggest problem," she added.
The county is requesting that folks notify them by Nov. 3 as to whether they are leaving property in the Green Acres program or removing it.
A person who does not return the paperwork to the county will automatically be grandfathered in.
LEGISLATOR'S RESPONSE
Isanti County Commissioners discussed the issue with three local legislators attending their meeting on Sept. 3.
State Representative Tim Faust told commissioners that the changes to the Green Acres law were done based on a State Auditor's report. The program hasn't been doing what it is intended to do, he said. There were concerns that in many places land was being included that was not part of the agricultural industry.
However, Faust said he's not convinced that the changes made solve the problem.
State Representative Rob Eastland acknowledged that the state legislature should have phased the project in over a four-year window in order to evaluate potential problems with the new regulation. "Based on what I've heard from Chisago County and you, this is a nightmare," Eastlund said.
"I think we're hearing from you loud and clear, and we will be hearing from citizens like a tidal wave," said Senator Rick Olseen.
The three legislators agreed that the Minnesota Legislature will be looking at this issue again as soon as the Legislature reconvenes in January.
But by then, it will be too late for landowners who had to make their decision.
* Editor's note: There are federal programs available through the Department of Agriculture that citizens can qualify for that will help preserve open space.