Lawmakers have been working for years on reforms to the state’s premier land conservation program. But differences between the House and Senate are again threatening to derail legislation.
The Current Use program has been around since the late 1970s. And land-use experts say it’s probably the most successful conservation program in the history of Vermont.
Property owners who enroll their land in Current Use temporarily forfeit development rights in exchange for drastically reduced tax bills. As of this year, about 2.3 million acres – more than a third of the state’s land mass – is enrolled in the program.
“It’s such a successful program, and we want it to continue to grow,” says Jamie Fidel with the Vermont Natural Resources Council, and statewide environmental group. “It’s 40 percent of the available forest land in the state, 75 percent of the dairy farms.”
But even some diehard proponents of Current Use, like Fidel, say the program has an image problem. Rep. Allison Clarkson, a Democrat from Woodstock, says penalties for withdrawing land from Current Use aren’t always stiff enough to keep people from gaming the system. In some instances, developers can save more on their tax bills than they’d pay in withdrawal penalties by parking their land in Current Use for as little as 220 days.
The program is projected to cost the state $57 million in fiscal year 2015, a figure that includes foregone revenue to the Education Fund. Clarkson says Current Use is undoubtedly delivering high return on that investment. But she says the long-term viability of such an expensive government program will require unwavering public support. And she says the insufficiency of the withdrawal penalties threatens to undermine credibility of the Current Use program among the regular taxpayer subsidizing the program.
The House passed legislation last year that ramped up penalties significantly, and would see people who withdraw their land pay a sanction of as much as 10 percent of fair market value on the parcel being pulled.
“One of the things we’ve been wanting to do for a long time, ever since the 2007 Current Use Task Force, was to put the teeth back into the penalty,” Clarkson says.
The proposal would generate about $1.4 million in penalties annually, according to a preliminary analysis performed by the Joint Fiscal Office.
But the concept of higher penalties isn’t as popular in the Senate, where key lawmakers don’t think abuse is rampant enough to warrant new sanctions. Essex/Orleans Senator Bobby Starr says a recent study found that fewer than 2 percent of acreage in Current Use is withdrawn every year.
Lamoille Senator Richard Westman says the higher penalties will hurt people with no intent to abuse the program, like land-rich, cash-poor farming families looking to make ends meet.
“They … need to sell a piece of land off to be able to liberate the capital for them to pay hospital bills, medical bills … and this may be their only asset,” Westman says.
The Senate has countered the House with a proposal that would cap the value of the tax benefit that a landowner can receive in Current Use. Starr says that would help contain the costs of the program in the long run, and therefore ensure the financial viability of the Current Use into the future.
But Fidel and Clarkson say that plan would erode the Current Use benefit in places with the highest land values – places they say land is also at the highest risk of being developed.
“So we think that the proposed cap is a recipe for subdivision,” Fidel says. “It’s what’s going to prompt people to look at potentially developing their land because of the property values that are associated.”
Westman and Starr are also pushing for a plan that would allow people in Current Use to pull two acres from the program without being subject to any penalties at all. They say that would allow people to break off portions of family land to raise money for household expenses, or for their children to build houses on.
Members of both chambers are also worried about municipalities gaming the system, consciously or not, by assessing artificially high values to land in Current Use.
The program is designed to be cost-neutral to cities and towns. So the state compensates municipalities for the revenue that would have been generated locally if the property was being taxed at its full fair market value.
But since property owners enrolled in the program have their property tax liabilities capped, they’re unlikely to appeal high valuations handed down by town listers. And some legislators say that means town listers have a financial incentive to inflate the value of parcels in Current Use.
Lawmakers say that while evidence of this practice is mostly anecdotal, stories of abuse are widespread and compelling enough to warrant stricter oversight. And the Senate bill would instruct the Department of Taxes to perform a random audit of 10 towns annually to look for discrepancies in values between parcels in Current Use and parcels being taxed at standard rates.
The bill is under review in the Senate Agriculture Committee. The House and Senate won’t begin to work out their differences until the bill passes through the full Senate.
