Current Use bill

Several Franklin County farmers have told me the state's Current Use program is the reason they are able to continue farming. The 30 year old program taxes agricultural land and forest land for its 'use' in production not its 'value' for development. The program is designed to reduce the property tax burden on productive farm and timberland, but forces a landowner who wants to develop his land to pay a penalty. This results in a huge property tax savings for about 80% of Vermont's farmers and landowners. It is the reason so much of Vermont's working landscape is maintained and productive. The program is not without detractors.

On Friday last week, the Ways & Means Committee voted out an amended version of a bill that proposes to make substantial changes to the Current Use program.
The bill is similar to one that passed the House and Senate last year, but was vetoed by Governor Douglas. Like last year's, this bill would substantially alter the penalty for withdrawing property from Current Use.

Under current law, a landowner must pay a penalty based on the proportional value of the parcel being withdrawn. For example, if a 100 acre property was valued at $100,000, the landowner could carve out a 10 acre parcel for development. The penalty is based on a valuation of $10,000 - even if the fair market value of the new 10 acre parcel was now worth $50,000 as a buildable lot. Under the last year's proposal, a 10% withdrawal penalty would be assessed on the fair market value of the 10 acre parcel standing alone ($50,000 in this example) - not its proportional value ($10,000).

This year's proposal is similar, in that the valuation basis will be the same (fair market value of the new, stand-alone parcel) but it differs because it proposes a tiered penalty structure that is based on the length of time the land is in the program, with the same owner, rather than a flat 10% penalty. The concept of a tiered penalty was offered by a coalition of diverse interest groups who spent a considerable amount of time developing a consensus recommendation on changes to the Current Use program. This coalition represented a range of organizations including conservation groups like the Vermont Land Trust and the Vermont Natural Resources Council and landowner groups like the Vermont Sugarmakers Association and the Vermont Forest Products Association.

Although the committee adopted the coalition's suggestion of tiering the penalty, it did not adopt the specific recommendations on the penalty amounts. The coalition's consensus recommendation was:
Withdrawal within 12 years of enrollment: 10% penalty
Enrolled for 12 - 20 years: 5%
Enrolled for more than 20 years: 3%

The Ways and Means committee adopted the following harsher penalty schedule instead:
Withdrawal within 12 years of enrollment: 10% penalty
Enrolled for 12 - 20 years: 8%
Enrolled for more than 20 years: 5%

Obviously this changes the rules of the game for landowners who are already enrolled in the program, so an 'easy out' provision was added. It allows landowners to get out of the program within a prescribed timeframe without paying a penalty.

The committee voted by a very narrow margin (6-5) to adopt the stricter penalty schedule, and ultimately voted out the bill favorably on a 7-4 vote. I was one of the no votes because I felt the Committee should have acknowledged the work of the Coalition. Getting so many groups to agree on a proposal was a nearly impossible task. We really should have supported them.

The bill will be voted on in the House this week, and will pass over to the Senate, which is unlikely to take action on it this year.

Contact me at cbranagan@leg.state.vt.us

Rep. Carolyn Branagan
Franklin-1, Fairfax/Georgia
Vermont House of Representatives