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State Giving Farmers Credit
LANSING — A bill planted in the state Capitol would make farmers and growers eligible for a credit against either their Single Business Tax or their income tax.
Sponsored by Rep. Howard Walker, R-Traverse City, HB 5030 would give farmers a $5 credit for every acre of land they own and allow them to subtract that credit amount from their property tax bills and claim the difference on their income tax returns or SBT filings.
“Right now the estimates on the average property tax in the state is in the $20 to $25 range per acre. That is just an estimate, but that gives you an idea that if a farmer is able to enroll in the program, then the savings would roughly be $15 to $20 per acre,” said Rob Anderson, legislative counsel for the Michigan Farm Bureau.
The House Fiscal Agency has set the bill’s financial impact to the state at $30 million, a projection based on the program running for 20 years and the fact that 20 counties have a comprehensive land-use plan — which is required for farmers to be able to enroll.
But under the bill, a local unit doesn’t have to be a county. It can be a township, village or a city that has drawn up provisions for land use within the past five years. If several townships have created a plan that each will follow, that union also qualifies as a local unit.
“What they would need to do is update their comprehensive master-use plan for that local unit of government. And in that updated plan, they would need to have provisions for agriculture protection that would include a relatively short list of items,” said Anderson.
A land-use map that highlights areas of protected farmland, a description of the strategy that will be used to preserve the acres, an explanation of why the land should be set aside and why the land was selected to be preserved are items that should appear on the list.
A local unit should also identify any land-use agreements that it has entered into.
“So they need to take their plan and incorporate those elements and that would make the farmer and farmland in that local unit eligible for the $5 per acre,” said Anderson.
Property owners that do participate would do so for 20 years, but the bill does allow a farmer to exit it at the 10-year and 15-year marks with some payback. Anderson felt that most Michigan farmers would favor the bill becoming law.
“I do not know why they wouldn’t want to see it pass because this is not a mandatory program,” he said. “It’s a commitment for time and I could see reasons why a farmer, based on circumstances, may not want to enroll in the program. But I’m not sure why they would see a disadvantage to having it available.”
According to the Treasury, ag property was 6.7 percent of the total taxable value of land in Michigan in 2002. That same year farms in the state had a real and personal taxable value of just under $8 billion. As for the SBT, the agriculture, forestry and fishing industries had a tax liability of $8.8 million in 2000, which was 0.4 percent of the total liability.
The total market value of agricultural in Michigan was $3.8 billion in 2002, with the USDA crediting Kent County farmers and growers with nearly $150 million of that total.
The bill has made it through the House and the Senate Agriculture Committee, and is ready to go to the floor of the Senate for a vote after this week’s elections.
“The only step that is left would be approval by the full Senate. There may need to be a conference committee to work out differences that the bills have picked up along the way, then it would be off to the governor’s desk,” said Anderson, who added that the Farm Bureau supports the bill.
“I think the potential is that we could see some action by the governor this year.”