Without the state’s current use tax program, “Vermont probably wouldn’t have a working landscape,” says a former president of the Vermont Land Trust.
Darby Bradley opened a panel discussion on the state’s current use program Tuesday with a short speech about the impact of the tax break for owners of forest and farmland on the state’s aesthetic and rural identity.
The Use Value Appraisal Program, known as “current use,” allows land in forest or agricultural to be taxed at a lower value than developed lands. Established in the late 1970s, the program aims to slow development and encourage farm and forest land use.
Tuesday’s panel discussion was part of the second annual Summit on the Future of Vermont’s Working Landscape at Vermont Technical College in Randolph Center, where hundreds of entrepreneurs, policy makers, business owners and community members convened to discuss the state of agriculture, food and forestry industries in Vermont.
Bradley and fellow panelists — Sen. Tim Ashe, D/P-Chittenden, Jane Clifford of Green Mountain Dairy Farmers Cooperative, Putnam Blodgett of the Vermont Woodlands Association and Tom Vickery of the Vermont Assessors and Listers Association — helped explain the law and discussed possible changes that could come under consideration in the 2014 legislative session.
A bill that passed the House last year increases the penalty for property owners who take land out of current use. This change aims to deter the practice of “parking” land — enrolling property in the current use program for a short time with the intention of withdrawing and developing it.
Current use policy must strike a delicate balance, Bradley said, given that fewer than 5 percent of Vermonters have land enrolled in the program. Landowners must feel that the taxes are affordable enough to keep the land undeveloped, and taxpayers must feel that the program is well-managed.
“While there is strong support for the working landscape among the other 95 percent of taxpayers, they are also taxpayers, and many of them have trouble paying their bills,” Bradley said. “If current use is perceived as a tax shelter for the wealthy, or is misused in ways, then I think support for current use will erode over time.”
CHANGES TO CURRENT USE
Ashe, chair of the Senate Finance Committee, detailed several current use reforms the Senate will take up next session. He and lawmakers from the Senate Agriculture, Natural Resources and Finance committees conducted a series of public meetings around the state this fall to gather input on current use policy. Ashe said the group will release a draft of proposed current use reforms within the next few weeks, holding one last public hearing in mid-January before taking it to the Senate.
Ashe said the most controversial issue has been the House’s change of the current use withdrawal penalties. Views among Senate legislators range from those who feel that there is no “land-parking” problem, and that higher penalties would deter use of the program, to those who feel that penalties should be high for everyone who wants to take their land out of the program. The group will attempt to reconcile these differences of opinion in their proposal.
Ashe said he and other legislators have also highlighted a lack of state oversight on agricultural land use within the program due to understaffing and high enrollment. While current use enrollees were once expected to confirm that their land was still in agricultural use every few years, Ashe said that is no longer happening with the same rigor.
“We need to maintain the integrity of (the program), to make sure that people are still following through with the practices for which they enrolled in the first place,” Ashe said.
He noted that county foresters, who oversee all of the forest land in the program, have also faced increasing workloads. Vermont’s 14 county foresters are now expected to oversee some 2 million acres of land.
“We’ve had extremely significant growth without any change in the number of county foresters,” Ashe said. “It’s clear that we need to be thinking about whether they can possibly do the right due diligence when their workload has grown so much.”
Ashe said constituents and lawmakers alike have expressed concerns that town listers appraise land at a higher value in order to bring in higher payments from the state. He expects the proposal to include a biannual audit of current use land, with the help of a third-party appraiser.
In response, Vickery, of the listers association, said one of the main problems with property assessment in Vermont is that town listers typically have limited training and serve on a volunteer basis. Towns, he said, can rarely afford to pay for additional training, so property values are not always consistent from one town to the next.
“Appraisal is not being taught,” he said. “We need a better system.”
Ashe said beyond overseeing property value, the biannual assessment would also ensure that agricultural lands enrolled in the program are still in use.
Overall, Ashe said, the reforms aim to make the current use program as effective as possible.
“For each anecdotal abuse that people hear about, it undermines confidence in the whole program,” Ashe said.
SUPPORT FROM LANDOWNERS
Jane Clifford spoke for Green Mountain Dairy Farms, a coalition of farmers who are members of dairy cooperatives. She also spoke as a dairy farmer with both agricultural and forest land enrolled in the current use program — she and her husband run Clifford Farm, an eighth-generation dairy farm in Starksboro.
“Land is our livelihood,” Clifford said. “We grow our crops, we raise animals, we manage it. We are stewards of the land.”
Since current use was established, agriculture in the state has changed — there are fewer than 900 dairy farmers today, though dairy still dominates the state’s agricultural revenue. Through the years, Clifford said the program has remained valuable for farmers with high property taxes.
“Our farm would have a very challenging time trying to dairy without a use value program,” she said.
Putnam Blodgett noted that he has long been a tree farmer but also was a dairy farmer for many years. Before current use was passed in 1978, he said, he would cut his best trees each year to gather enough cash to pay property taxes, which he said was not a sustainable system of forest management. Now, those with forest land enrolled in the current use program must have a forest management plan that is overseen by county foresters.
To him, current use makes sense for a state with an interest in keeping farm and forest land active.
“Why would we tax land on the basis of what it might be worth if developed?” Blodgett asked. “Farm and forest lands do not earn enough per acre to pay developed taxes.”
Though the state might appear to be losing out on property taxes, Blodgett said, current use has financial benefits in other areas of the system, like tourism.
“How may leaf peepers would come here if there were no trees?” he said.
A CALL TO ACTION
Bradley emphasized that there is widespread support in the state for agriculture and forestry and, in turn, the current use program. But he noted that loopholes and misuses of the system only serve to weaken the program’s image overall, and urged support for legislation that would reform and strengthen the program.
“The time to fix problems is when we have supporters in the majority,” he said. “We need action on this.”