Minnesota Lawyer
State lawmakers on a tax conference committee are fighting over how to fix the troubled farmland preservation program known as Green Acres.
At issue is whether to “grandfather in” more than $2 billion worth of mostly non-tillable farmland that currently receives tax breaks from the 40-year-old tax equalization program designed for productive farmland.
Since 1967, farmers in certain Minnesota counties have paid lower property taxes by enrolling their farms in the Green Acres program, which is designed to shield farmers from sharp hikes in their property values brought on by nearby development pressures.
Lawmakers at the state Capitol are trying to address findings from a Legislative Auditor’s report released in February that Green Acres provides the tax benefits for non-productive farmland that represents about 38 percent of the land in Green Acres.
Senate Property Taxes Division Chairman Rod Skoe, DFL-Clearbrook, has proposed changes to Green Acres this session that would remove from the program the sloughs and forests that make up the 38 percent of Green Acres land that isn’t used for agricultural production.
Skoe and his counterparts in the House have proposed different measures this year to restrict the land that can be included in Green Acres.
“We’re restricting Green Acres to productive ag land. This idea that you are going to have land that you are setting aside for development qualify for Green Acres is shifting a huge property tax burden onto homeowners,” Skoe said.
The conference committee debating the omnibus tax bill is now considering a new tax classification for vacant rural land. Property in Green Acres that isn’t used for agricultural production would be placed into the new category.
But Skoe said he isn’t willing to support a provision in the House version that would grandfather in most of the nonproductive lands currently under the Green Acres banner.
Skoe said the grandfather provision puts “a pretty big monkey wrench into the whole issue.”
The grandfathered land would total about 25 percent of land in Green Acres, according to the state Revenue Department. That 25 percent would amount to $2.7 billion of market value.
Rep. Dennis Ozment, R-Rosemount, who pushed for the grandfather provision, said some farmers with land in Green Acres agreed to take their land out of production as part of a conservation easement.
“All of a sudden we would be raising their taxes,” Ozment said.
Thom Petersen, government relations director for the Minnesota Farmers Union, said there are concerns that land conservation programs like the Reinvest in Minnesota (RIM) program and the Conservation Reserve Enhancement Program (CREP) might be excluded from Green Acres. Property owners with land in programs like RIM and CREP might not have taken their land out of production if it would have disqualified them for Green Acres, Petersen said.
“You might not have signed a permanent easement if you had known your Green Acres was going to get taken away from you,” Petersen said.
Green Acres includes 315,000 acres, or about 1 percent, of Minnesota’s 29.5 million acres of farmland. As of 2007, the Green Acres program sheltered $10 billion of property value from taxation, creating a large tax shift onto other property taxpayers, according to the auditor’s report.
Skoe said he expects to work out a compromise this session. Tax conferees are negotiating the tax bill as the May 19 constitutional adjournment date approaches.
