House, Senate differ on Current Use penalty
There's a problem with Vermont's Current Use program, lawmakers agree, but just how to solve it is another matter.
Some landowners temporarily "park" land in Current Use, a special tax structure designed to make it affordable to conserve Vermont farms and forests in perpetuity.
With more than 2.3 million acres enrolled as of April 1, Current Use is costing about $57 million in municipal reimbursements and forgone tax collections, combined.
"What we're trying to get away from is a perception of allowing developers to milk the program and walk away with a bunch of money," said Sen. Bobby Starr, D-Essex/Orleans, who chairs the Senate Committee on Agriculture.
Enrolled land is taxed on the value of its "current use" rather than its full market value. If a landowner wants to pull out of the program, he or she must pay a tax - often called a penalty - when the land use changes.
"We're trying to fix this once and for all, so maybe for the next couple of years we might be able to work on something else that needs addressing," Starr said.
Senate Agriculture Wednesday unveiled its recommended changes, including a new penalty structure they say will help eliminate parking. It differs from a bill passed in the House in 2013.
Senators propose increasing the penalty when land is taken out of Current Use after less than a decade. Any land that is taken out would be taxed at 10 percent of fair market value. Starr estimates the provision more than doubles the penalty.
Starr defended his committee's proposal to charge a 10 percent land use change tax on the pro-rated value of any land or portion of a parcel that's pulled from the program after 10 years.
Jamie Fidel of the Vermont Natural Resources Council said the penalty for withdrawing land after more than a decade remains weak, at best, and may even be diluted.
The House version takes a different approach to the penalty structure.
The percentages are lower: 10 percent for land enrolled less than 10 years, 8 percent for land enrolled up to 20 years, and 5 percent for land enrolled longer. But all would be applied to the higher full market value, making most of the penalties stiffer.
Starr expects to give landowners the option of leaving Current Use without a penalty when they make changes - as a matter of fairness to someone who signed up under different rules.
Starr said the bill likely will be voted out of his committee this week or next.
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