Farmers and ranchers better hurry to get their conservation easements into a land trust this year, because if HB10-1197 passes, the unlimited millions of state tax write offs previously available will be trimmed to a mere $26 million per year from 2011 to 2014.

Bill trims conservation easements
Under the bill to reduce the conservation easement cap amount, a minimum of 69 farmers or ranchers will receive up to $375,000 in tax breaks each year between 2011-2014. This compares to the 750+ who received the write offs in 2007 and 2008.

Fewer easements mean fewer tax write off sales
Once obtained, farmers and ranchers sell the easements to rich Coloradans who need tax breaks. The easement exemption reduces taxes dollar for dollar. A vibrant market for these tax write offs exists, as most exemptions are sold for up to 85 cents on the dollar. This gives farmers and ranchers immediate, non taxable cash in their pockets.

Easements supposed to protect open land
Conservation land easements allow farmers and ranchers to preserve their land, or portions of land, for ranching or agricultural purposes, in perpetuity. These property owners assign the easements to land trusts. The easements are supposed to protect agricultural land from development, thus preserving wild life, riparian zones, and open space.

Farmers and ranchers use the easements to keep their properties whole, or partly whole, by preventing children or future owners from breaking up the lands. The landholders retain all ownership, and usually continue their farming and ranching. In this way, they can take advantage of more federal and state subsidies, payments, and tax credits.

23 Weld County farmers grabbed $3.3million tax breaks
Weld County, home to Greeley, is a good example. From 2007-2008 (the years for which data is available from the state Department of Revenue), 23 farmers and ranchers received $3.3million in state conservation easement tax exemptions to protect their lands from shopping centers and subdivisions.

Weld farmers got $32.3 million in federal farm payments from '03-'05
In the years 2003-2005, Weld county farmers received $32.3million in federal commodity program payments (the latest years for which data is available from the Farm Bill 2007 Database.) Of that amount, $18,615,679 was direct payment.

Because state records do not reveal the people receiving conservation easement exemptions, it's impossible to know whether the same people have received conservation easements and federal subsidies and payments, but it is likely that some have.

Wray Brophys pull in $450,000+ in farm payments
The top commodity program farmer in Weld County from 2003-2005 is Harry Strohauer. He received $301,349, with $102,753 in direct payments. Greg Brophy, a state senator from Wray and a member of the Senate Finance Committee that heard HB10-1197, is a piker at federal subsidies, taking only $26,873 between 2003 and 2005. But if you count all the Brophys in Wray who have taken federal subsidies in that time, the amount climbs above $450,000.

The senator from Wray did support his fellow farmers by voting NO on HB10-1147 in order to preserve the unlimited tax exemption model of current law.

Rural Prowers County protects itself from malls
Prowers County has one of the lowest populations in the state, with 14,062 people in 2004, a robust drop of 2 percent from the previous year. Prowers is at the far south eastern side of the state, bordering Kansas. Highway 50 stretches across the county, speeding traffic from Granada to Holly, the two main towns.

Despite its entirely rural landscape, the County received $15,719,625 in state conservation easement tax exemptions from 2007-2008. This careful protection of Prowers farms is certain to push away the threat of any big city mall and subdivision developers.

Prowers farmers get state and federal conservation money
In addition, over 650 Prowers farmers received $15million+ from the federal Conservation Reserve Program between 2003 and 2005. Perry Tempel was top recipient at $150,000 with David Willhite coming in 20th at $123,037. Another $12.2 million in subsidies added to the county's haul, mostly for wheat, corn, and sorghum.

It's all good-- to protect ag, recreation, and tourism
According to Chris West, executive director of the Colorado Cattlemen's Association Land Trust, which holds about 20 percent of the state's conservation easements, these farmers and ranchers deserve this government bounty. "The easements protect key state industries including agriculture, recreation and tourism."

Unfortunately for most state tourists, even those few who drive across Prowers County, the easements do not guarantee public access to the properties. Most easements support agriculture or ranching uses, and while tourists may be able to see the properties from the roadside and wave as they drive by, they may not actually walk on or explore the properties without permission.

Certainly some properties may be subject to subdivision. That's the claim from land owners in Chafee county with Salida at its center. Ranchers in Chafee received $5,808,500 in conservation easement exemptions from 2007-2008. Fifteen ranchers also received almost $100,000 from the federal environmental quality incentive program.

State and federal dollars boost farm profits
Farmers and ranchers claim that they are one of the leading economic forces in the state, but a substantial amount of that money apparently comes from their resourcefulness at finding various federal and state program payments, subsidies, and tax breaks. Just the environmental quality incentive program brought in $22,187,178 for Colorado from 2003-2005. All federal commodity programs in Colorado brought in $382 million in payments for those years.

Revised bill protects easement dollars for future
So back to HB10-1197. Why did bill sponsors Representative Mark Ferrandino (D-Denver) and Senator Rollie Heath (D-Boulder) change the bill from a $135,000 maximum tax exemption to a maximum $26 million per year outlay for three years? Apparently ranchers, farmers, and land trusts objected to the original bill, believing that the lower amount might continue past the three years.

The compromise is based on halving the estimated $52 million the state gives out in exemptions per year, according to Larry Kueter, executive director of the Colorado Coalition of Land Trusts. But Phillip Horowitz of the state Department of Revenue indicated that the true figure for 2007 was about $100million+ and about $62 million+ for 2008. Over 750 entities received the tax exemptions in those two years.

State may pick up $92 million to fill multi billion gap
The state hopes to gain $18 million in 2011 and $37 million in 2012 and 2013 in additional tax revenues. Meanwhile, the state's $18 billion budget for 2009-10 needs more cuts. Governor Bill Ritter keeps adding to the $1.8 billion he has already cut, and more will be in the offing for 2010-2011.

Ag mad about HB10-1293
Agriculture interests are bitterly fighting HB10-1293, a bill to study the agriculture exemption property tax during the legislature's interim season because they fear their property may be rezoned, reducing their property rights and development opportunities.

And HB10-1205
HB10-1205 is also causing fits because counties have to notify military base commandants if any residential or commercial development will occur within two miles of the bases. Farmers who have not placed their properties into conservation easements want to be able to develop their properties near military bases regardless of any jet noise overhead.

Ag loves SB10-098
Finally, with SB10-098, farmers and ranchers are trying to grab $7.5 million of GOCO money that's supposed to be used exclusively for public lands. These funds would enable conservation districts, which serve private property owners, to fight noxious weeds with these public dollars.

This bill is sponsored by Representative Jerry Sonnenberg, who received $80,822 in federal farm subsidies from 2003-2005, placing him 16th in federal revenues for Logan County. Sonnenberg was also named Colorado Union of Taxpayers legislator of the year.

School districts should dump ball fields, grow sunflowers
School districts in Colorado, which are universally hurting for money because of state revenue cuts and lower property tax revenues, should consider planting sunflowers in their ball fields. Representative Sonnenberg received $5,089 in pass through subsidies for his sunflower crops. While the revenues may not be huge, every little bit helps, and art teachers can use the fields as a means to study Vincent Van Gogh. PEN, CCW

 

This post was published on March 15, 2010. Permalink »