Minnesota Lawyer
State legislators are mulling ways to reform a 40-year-old farmland protection program that has allowed large amounts of non-farmland — swamp and brush — to qualify for state tax benefits.
Senate Property Tax Division Chairman Rod Skoe, DFL-Clearbrook, said proposals are moving through the Legislature to reform the so-called Green Acres program that is intended to shield farmland from rising property taxes brought on by urban development.
But too much of the land the program is protecting shouldn’t qualify as farmland.
“In the 40 years that this has been in place, we’re seeing a large percentage, over 40 percent, of the land that’s in the Green Acres program, that’s not tillable, not farmland,” Skoe said.
In the end, area taxpayers have to pay more taxes than they should when farmland is inappropriately classified as qualifying for Green Acres, according to Skoe.
The Legislative Auditor on Feb. 8 released a report on the shortcomings of state agriculture land programs, most notably Green Acres. The auditor’s report found that the impact Green Acres is having is “short term and tenuous.”
The effort seeks to preserve agricultural land by lowering the taxable value of the land. Farmland enrolled in Green Acres is only taxed based on its agricultural value. External factors like surrounding commercial and residential development are left out of the factors that determine the value of land enrolled in Green Acres.
Minnesota has 29.5 million acres of agricultural land, which represents 58 percent of the state’s total land area. About 13 percent of the state’s agricultural land is enrolled in the Green Acres program – or about 383,500 acres.
If 40 percent of the farmland in Green Acres should not qualify for the tax benefits, then, that would represent 153,400 inappropriately classified acres of farmland.
Skoe said taxpayers in some counties are picking up the property tax tab unfairly because nonagricultural land is being sheltered from taxes due to Green Acres.
“What we need to do is go back to what the original rationale to put Green Acres in place to begin with was. And that is there are pressures outside of agriculture that are increasing the value of ag land and making it harder for people farming that land to remain were they are,” Skoe said.
Some proposals to change Green Acres were introduced last year before the auditor’s report. Skoe said the auditor’s report has given rise to new legislative proposals to change the income requirement criteria to qualify for Green Acres.
The Senate right now is debating changes to Green Acres as part of an omnibus tax bill before that chamber.
The auditors’ report specifically recommended the Legislature clarify the types of land and landowners that should benefit from Green Acres. The report also found that current income criteria for Green Acres don’t “sufficiently filter out” landowners that shouldn’t be in the program.
The report recommended replacing the current income criteria with new laws that define land as “primarily” agricultural.
In addition to Green Acres, the auditor’s report scrutinized two other agriculture preservation programs: The Metropolitan Agriculture Preserves Program and the Agricultural Land Preservation Program in greater Minnesota.
In 2007, farmland owners in the three programs saw their property taxes reduced by about $40 million, according to the report. The auditor’s report added that surrounding property owners make up the difference by paying “somewhat more property tax than they otherwise would.”
