Today at 1:30 the House Finance Committee heard a proposed substitute for E2SHB 1437. You can read that document here. The proposed substitute was sponsored by Representative Reykdal, the prime sponsor of the bill as introduced.
A description of the fiscal impact is here.
You can watch the hearing on TVW. The hearing on HB 1437 begins at about minute 42.
Great testimony. You will appreciate all of the good thinking from Nancy Laich (Common Ground Farm), Jim Goche (Friendly Grove Farm), Heather Hansen (Nursery and Landscape Association), Margaret Skolmen (consumer and taxpayer) Loretta Seppanen (South of the Sound Community Farmland Trust), Peggy Smith (League of Women Voters), Ron Schulz (Conservation Commission and Office of Farmland Preservation), Bruce Morgan (Thurston County Farm Bureau), Addie Candib (Tilth Producers of Washington), and Holli Johnson (State Grange). Signing in as supporting were Evan Sheffels from the State Farm Bureau and Jeannette MacKeague with the State Realtor Association. A range of perspectives and interests and all coming together to work on this simple fix.
Opposition as expected came from the County Assessors. The tax shift, which is the result of the budget based property tax system, is a concern to the Assessors. The current use program isn’t really causally linked to the loss of revenues occuring at the local level. And the tax shift itself is a symbol of public benefit. The average statewide increase in taxes would be around $3. Proposal advocates believe that the existing current use system is not fair to small farms and this shift and the tax increase are necessary to modernize the current use program so that it reflects the growing importance of small farms to communities across the state. Right now as it exists the system is not fair. And an unfair tax system makes folks feel downright creepy.
Some thoughts as you think about this proposal:
Tax Policy – Dollar Impact Is Now on Small Farmers – Under Current Use Tax Policy it should be Spread Across the Taxing Districts
The fiscal note illustrates the need for this bill. It shows a shift statewide and locally, and a local loss. This is real money especially given that today it is all concentrated on our small farms. The public policy question is should the taxpayers in the state share this burden. Is this in line with the Open Space Act goals? Yes. The current use program isn’t a handout. It is recognition that farming is the highest and best use of farmland. Based on 2012 DOR data the average shift in the state for this proposal is around $3 for a residence assessed at $200,000. This is not much money to make the tax code fair and remove a barrier to small farms.
The County Assessors have Everything they need to Administer this Change in Law.
This bill is simple because the Assessors are managing this issue today. They face the same inquiry with large farms. The Assessors have extensive statutory authority. Existing law and this proposal will use identical standards and criteria to determine eligibility. Assessors can ask farmers for IRS information, for books and records, can come on the property and make an evaluation, and can sit down with the farmer and discuss the issue. Assessors have agricultural advisory boards made up of farmers that help them think about and approach these issues. Assessors know this program and how it works.
All Structures are assessed at Fair Market Value.
We hear about sprawling houses, with pretend farmers watching big screen TVs and cheering on the Seahawks. First, McMansions and shacks alike will be assessed at fair market value. The current use program is about land, not structures. The land preservation goal doesn’t distinguish between rich farmers and poor farmers, or modest farmers, or even care about home décor; it is about farming and farmland. The question is whether the use of the house is integral to the farming operation. If the person living in the big house is not a farmer they should have the land under their house assessed at fair market value.
Farm Economy – Keeping Small Farms Viable Is a Plus to the Tax Base and to Communities
Various studies have followed the dollars spent locally and the impact of small farms. Small farms contribute to state and local economic activity and increase the vitality of communities.
Next steps are to get the bill scheduled for executive.
Please contact Chair Reuven Carlyle, Vice Chair Tharinger, Ranking minority member Terry Nealey, and Representative Reykdal requesting that the bill be exec’d.
The cut-off for this stage of the process is February 11.