Perhaps many Twin Cities-area residents shrug their shoulders when the topic of a tax policy for farmers comes up. For city slickers, farms are for the middle-of-nowhere and of little concern.
Wednesday's hearing at the Capitol on the Green Acres Law, should prove the exception. The law allows a lower property tax rate for farm property that is in production. It becomes an issue the closer you get to a city, however, because farmland is valuable property if it could sprout houses. Under current policy, if a farmer sells the land, he/she has to pay seven years of additional back taxes. But he/she also pays more money if the land is "unproductive."
When tax policy is used to force behavioral changes, it causes all sorts of unintended consequences. The Green Acres law was meant to "convince" farmers to keep the land in production, by making it financially impossible to sell it to developers.
The problem comes by the definition of what is "productive."
Take the case of Lake Elmo farmer Peter Kastler, as told by the Bemidji Pioneer:
Lake Elmo farmer Peter Kastler said his grandmother lives on the home place and wants it to remain farmland.
"It is a place I cherish deeply," he said.
The family even opted to keep open some land next to a housing development, so homeowners would not need to deal with cows, tractors and other farm operations. But forcing the family to pay the equivalent of seven years of higher home property taxes just for keeping land open is not fair, he added.
It's even worse in the Winona area, where hilly unusable farmland costs more money in taxes because it's "unproductive."
And the cost of adding environmental buffers to prevent contamination of streams through farmlands could eliminate such protections.
Earlier this month, MPR's Sea Stachura profiled a Belle Plaine woman who's trying to decide whether to tear out hardwood trees that act as a buffer between a stream and a hazelnut field.
This issue is one of the big non-deficit issues facing the Legislature this session. And while the argument is obviously being made that the removal of the tax breaks has unintended consequences, the debate also is set against the backdrop of the report from the legislative auditor last winter that led to last year's decision to limit the tax breaks. In it, the auditor said the Green Acres program, designed to keep farmland out of the hands of developers, didn't work.
Given the plummeting rate of new housing starts, perhaps the Green Acres program has outlived its usefulness. Or replace it with a significant capital gains tax targetted at land that has been zoned agricultural within the last 10 years.