A Senate committee will be holding a hearing at the State House Tuesday on the Use Value Appraisal program, better known as current use program, which applies to 2.4 million acres, or 38 percent of Vermont’s land. Current Use allows property owners to pay taxes based on the agricultural or timber use of the property instead of the market value.
Supporters of Current Use say the program keeps land in working use and protected from development. But in the past few years, there has been movement at the state house to make changes to the program. VPR’s Mitch Wertlieb spoke with Phil Dodd, the publisher of the Vermont Property Owners Report and the Current Use Report.
“It is a very big program in Vermont and it’s grown, at a rapid rate since it was developed in the 1970s. It’s designed the keep forest land and agricultural land open and in use as part of our working lands. And in exchange for not developing the property and in exchange for not developing it, the owner gets a big tax break. The supporters of the program say more accurate taxation, because it’s only being taxed at what it’s being used for instead of its development value,” Dodd said.
“It can be up to 90 percent off your property tax bill,” Dodd said. “It depends on the value of your property. The state and the town assesses you at a certain value that’s established every year, for 2014 it’s going to be $279 per acre, and for forest land $118 per acre. If your land is worth a $1,000 per acre or $5,000 per acre, you’re getting a nice reduction in your property tax bill.”
The program is growing, with 400-500 landowners joining every year. But that comes at a cost to the state in lost revenue, estimated at $57 million, broken into two parts: $43 million in lost revenue to the education fund, and $14 million that the legislature allocates to send back to towns to make up for lost municipal taxes. That money would be available for the state's coffers if the Current Use program did not exist.
Changes have been proposed to the program in recent years. In 2010, Gov. Jim Douglas vetoed a bill that would have imposed a charge on all properties enrolled in the program. It also made changes to the development penalties to prevent property owners from “parking” land in current use (holding it with the program's tax breaks until its ready for development), and then taking advantage when it's time to sell the parcels, often piecemeal, and at a big profit.
The House passed a bill last session that changes the way the development penalty is calculated when you take a portion of the property out of the program. The bill also makes changes to the development penalty, the rates and when they apply.
The Senate committee has held hearings around the state, and its proposal has taken a different approach. “The one that jumps out is a cap on benefits. If you have a very expensive property, as a result of the town you’re located in or some other benefit like being on a lake, there are saying that you could potentially not get the full benefit of current use, you could only get it up to a certain amount. There are some other changes in there that have to do with the way you assess properties that are only partially enrolled, and also a proposal to have rules created for agricultural land. Right now, there’s no management plan or oversight for the ag side, and they’re proposing that in this bill,” Dodd explained.
Dodd said the cap on benefits could be aimed at wealthy landowners, but might cause problems for farmers in those towns. For example, farmers that may have owned a farm for four generations and happen to fall under the wealthy landowner designation based on location, could be hurt by the cap of benefits.
“There does seem to be a push, the Senate leadership seems to want a bill passed,” Dodd said, but he added that the two bills are so different it would be a challenge to reconcile them in a conference committee.
The Senate committee hearing will take place from 6-8 p.m. in Room 11 at the State House.
