Tax bill for farmers goes up 30-100 percent

Farmers pack meeting to express dismay, local legislators encourage them to share opinions with state leaders

Farmers in Isanti and Chisago counties saw their property taxes go up 30 to 300 percent this year, and some as high as 800 percent.

These bills propelled more than 200 people to a meeting hosted by local legislators at the Cambridge college on Tuesday night, March 2, 2010.

The focus of the meeting was changes made over the last few years to the Green Acres program, which offers farmers a tax break. Much of that tax break went away this year. Today only land that is tilled, mowed for hay, grazed or used for other agricultural purposes is eligible for Green Acres status as class 2a acreage. Land that includes sloughs, wetlands, and heavy woods is no longer allowed. Instead, it has been reclassified as Rural Vacant Land or class 2b.

Stearns County Assessor Gary Grossinger noted that there year there is “the perfect storm” for farmers. Residential values are decreasing while agricultural values are increasing. Also the state has mandated valuation increases as the limited market value program is phased out completely. “The farmer’s piece of the pie got bigger,” Grossinger said.

Chisago County Assessor John O’Keefe admitted that it is difficult for his office to determine what is productive and what isn’t. Adding to the problem is that the use of the land changes every year. “Call a farm a farm,” he said. “I think that would be a huge help for us as assessors.”

The Farmer’s Union pushed the Legislators last year to view farms as a single entity versus productive and nonproductive. “We tried to make the argument that a whole farm is a whole farm,” stated Thom Petersen of the Farmer’s Union.

‘We have to mitigate the damage.’

The changes to the Green Acres tax provision for farmers was changed in 2008 based on a report from the nonpartisan Office of the Legislative Auditor. While Senator Rick Olseen and Representative Rob Eastlund introduced bills to repeal the changes in 2009, the bills were not supported by the majority of the Legislature. Both intend to re-introduce the bills again this year, but neither are hopeful they will be passed. Instead, they’re focusing on making smaller changes.

“We have to look at ways to mitigate the damage,” Eastlund stated.

Olseen is pushing for a reduction in the tax rate, lowering it from .75 percent to .45 percent for farmers.

He also hopes to bring back a valuation formula that allows each individual county to factor in its own production rates and land rental. While farmers in southern Minnesota are charging $300 per acre in rent, those in this area charge about $30, Olseen noted. Currently, the state is basing its valuations off of five counties in the southwestern part of the state. But in Chisago County the $3,000 valuation for Green Acres is more than the average sale price of $2,200 per acre, noted Chisago County Assessor John O’Keefe.

Eastlund has introduced a bill to push the May 1 deadline to withdraw from the Green Acres program without a penalty to Aug. 15 instead. His second bill would offer relief to farmers dealing with a huge spike in their property taxes this year by staggering the implementation of the new rates.

Senator Lisa Fobbe (from the neighboring counties of Sherburne, Mille Lacs and Benton) has introduced the Circuit Breaker Bill which would offer relief to those who are paying 25 percent or $250 more this year in taxes.

These bills are being heard at the Legislature on Wednesday, March 9. Legislators encouraged citizens to attend the meetings to show their support for farmers. The Senate meeting will be at 8:30 a.m. in room 15; the House meeting will start at 1 p.m. Public input is taken at all committee hearings.

‘It will take your voice.’

While local legislators are concerned about the Green Acres issue, it doesn’t affect other parts of the state and so those Legislators don’t see the a need to make any additional changes, observed the leaders on the stage. Chris Radatz of the Farm Bureau noted that the chair of the House Agricultural Committee (who is from Kandiyohi County) hasn’t received a single call on the issue.

“This doesn’t end tonight,” he told those gathered. “This is the beginning. You need to follow the process.”

Olseen added that it would help to show his fellow Senators that this is an important issue if he had a big stack of letters and emails to bring to committee meetings. Eastlund encouraged farmers to call the House and Senate chairs of the agricultural and tax committees. (See sidebar for contact information.)

“We’re getting hoarse,” said Rep. Jeremy Kalin (who is not seeking re-election). “If we have any chance of influencing people, it will take your voice.”

Some relief offered: Rural Preserve

In 2009, the Legislature did offer some relief to farmers affected by the changes to the Green Acres program made the year before. A Rural Preserve (RP) program was created and functions much like the Green Acres program. The different is that the Green Acres program is for “productive” property, while the Rural Reserve program is for “non-productive” land like wooded areas and swamps. Farmers can begin taking advantage of the tax break as early as 2011.

To qualify for the Rural Reserve program, farmers must enroll at least 10 acres (not including house and garage). They must promise to be a part of the program for at least 10 years, and then give a five-year notice before leaving it. As with Green Acres land, any property withdrawn from the program will be subject to a three-year payback of deferred taxes. Also, to enroll a conservation plan must be developed and filed with the local county, which may cost between $300 to $500. Land can be sold, but it needs to stay in the program.

If you own a 160-acre farm with 80 tillable acres, 40 pasture and 40 covered in trees, you can keep the 120 cropland and pasture in Green Acres, explained Olseen. You can enroll the 40 wooded acres in the Reserve Preserve program to obtain some tax benefits.

Eastlund, who owns a farm in Isanti, does not intend to enroll any of his land in the Rural Reserve program even though his taxes went up 40 percent this year.

“I have a personal problem with every acre of non-tillable farmland [being] under the microscope of government,” Eastlund stated.

MAKE YOUR VOICE HEARD

Call these state leaders:

• House Chair of the Agricultural Committee: Rep. Juhnke, 651-296-6206

• House Chair of the Property Tax Division: Rep. Marquart, 651-296-6829

• House Tax Committee Chair: Rep. Lenczewski, 651-296-4218

• Senate Tax Committee Chair: Sen.Bakk, 651-296-8881

DEADLINES

May 1, 2010 - Withdraw your non-productive class 2b acres from the Green Acres program without paying a penalty. If you want to enroll it in the Rural Reserve program, you need to start working on a conservation plan.

Jan. 1, 2013 - All class 2b acreage will be automatically removed from the Green Acres program. Farmers will be charged three years deferred taxes. If you’ve opted to enroll this land in the Rural Reserve program, you will continue to receive a tax deferral.