ST. ALBANS — Farmers and town listers turned out Tuesday night to discuss proposed changes to the current use program intended to discourage landowners from “parking” land in the tax abatement program while simply awaiting the best development deal.
Farmland and forests enrolled in the current use program are taxed at the value of their use, rather than their market value. In 2012, landowners enrolled in the program saved $54.6 million in taxes.
During the last legislative session, however, the Vermont House passed a bill intended to exact a higher penalty for enrolling land in the current use program for less than 10 years. The Senate never acted on the bill, instead creating a committee to hold a series of public forums around the state to gather public testimony.
Last night’s forum at Bellows Free Academy in St. Albans was the second of four. While several people declared their support for the program, the actual proposed changes received little discussion.
When current use was created in 1980, landowners who withdrew land from the program for development paid a penalty based on the fair market value of the land withdrawn. The Douglas Administration changed that penalty so that the penalty was based upon the pro-rated value of all of the land the landowner has enrolled in the program.
As Sen. Mark MacDonald, D-Orange, pointed out, a farmer or forest owner with an average land value of $1,000 per acre could withdraw 10 acres from current use, sell them for $50,000, but pay a penalty based not on the $5,000 per acre the land sold for, but the $1,000 average value.
With the House bill, the penalties would once again be based upon the market value of the land withdrawn from current use. If the property has been enrolled in the current use program for less than 12 years, the penalty would be 10 percent of the land’s value. After 12 years it would drop to eight percent and after 20 to five.
“You folks in Franklin County, you have a lot at stake here,” said Sen. Bobby Starr, D- Essex-Orleans. Landowners in Franklin County save more than $4.1 million annually as a result of being enrolled in current use.
Randy Vance, of Georgia, who is an assessor in Essex, served as an advisor to the committee that reviewed current use in 2010. The committee was comprised of representatives from numerous farming, conservation and recreation groups.
The recommendations of the committee were passed by the Legislature, but vetoed by Gov. Jim Douglas. The bill included stiffer penalties for withdrawing land from the program.
“All these groups have a real vested interest in current use and they’re looking at the long term viability of it,” said Vance.
Vance said he has heard from assessors around the state who are concerned about those who park land under the current use umbrella. “The penalties to get out are really zero to nothing,” said Vance, adding that land with a value of $80,000 could be withdrawn for a $1,000 penalty.
Bakersfield lister Sue Sonski said that current use enrollees in her town receive a total break on their education taxes of $150,000 per year. Those taxes must be made up. “Education taxes are higher for all property owners in the town as a result of current use,” said Sonski.
She suggested there should be a cap on the income of current use landowners so that those who could afford to pay the full taxes on the property would do so.
Harold Howrigan, III, of Fairfield, sits on the Current Use Advisory Board, which determines tax rates for land enrolled in the program.
“I’m a very strong advocate of the program as it is,” said Howrigan. The goal of the program is to “keep our land open and keep it affordable so we can farm it,” he added.
Absent current use many farmers would not be able to remain farming, according to Howrigan. “It’s really essential to the bottom line,” he said.
“Open land requires very little services and doesn’t crowd the school with kids,” he noted.
His remarks were echoed by Dan Boomhower, of Williston, who has land enrolled in current use. “Without current use we’d have to sell out,” said Boomhower. “Without current use our viewsheds (land visible from a single vantage point) would all just be subdivisions in Chittenden County.”
“There’s no one I know of in Montpelier whose talking about getting rid of current use,” Sen. Tim Ashe, P-Burlington, said at the beginning of the meeting.
Fairfax forester Scott Moreau said that he advises landowners with hundreds of parcels in current use in Franklin and Chittenden counties. “The parking of the land, I believe, is a complete fallacy,” he said.
Asked by Ashe if he believes there is no parking going on, Moreau said, “I can’t attest to other parts of the state.”
Moreau said he has not seen evidence of parking in the parcels with which he has been involved.
Ashe drew a comparison with other government programs, suggesting that if the media were to expose abuse by one or two recipients of food stamp, the public would want revisions to the program. If there are people taking advantage of current use, shouldn’t changes be made to discourage that abuse, he suggested.
MacDonald, whose family has had land enrolled in current use since its inception, said, “There are some problems with current use. Perhaps we should discuss them instead of saying we’re strong supporters of current use.”
“Is current use perfect? Absolutely not,” said Ralph McNall, president of the St. Albans Cooperative Creamery. He expressed concern that tinkering with the program might result in more losses than gains.
“I personally believe that the only people that can screw up this really good program are those of us who are in it,” said MacDonald. His family has enjoyed the benefits of current use for more than 30 years, he said. With the current penalty structure, his family would pay little penalty for removing land from the program. “It’s a free ride for me,” said MacDonald.
Statewide, 41 percent of the land in Vermont is enrolled in current use, a program which taxes farm and forest lands enrolled in the program on their current use rather than on the fair market value of the land. Farm buildings are not taxed at all.
The state reimburses municipalities for the lost tax revenue. In 2012, the amount transferred to municipalities was $12.55 million.
School tax revenue is made up through the education fund.
The committee will sponsor two more forums before having a final meeting in Montpelier to review their findings. Presumably, the Senate will resume discussion of the current use penalties in January.