State legislature considering new, expanded tax credits, exemptions for farmers
COSTAR
The Taylor Brooke farm property in Woodstock.
With Connecticut farmers facing millions of dollars in cuts to federal programs, the state legislature is considering ways to ease their pain.
During a meeting of the legislature’s Finance, Revenue and Bonding Committee on Tuesday, the committee considered two bills that would provide credits or exemptions for taxes on property and personal property used in farming.
House Bill 7175, which would establish a “farm investment property tax credit” and increase the property tax exemption amount of the assessed value of farm machinery, was voted out favorably by the committee by consent along with a series of other unrelated bills.
Senate Bill 1183, which originated in the Planning & Development Committee and was referred to the finance committee, would make certain motor vehicles used exclusively for farming eligible for personal property tax exemptions. The committee, however, took no action on that bill on Tuesday. The bill coud be brought up by the finance committee on Wednesday, according to a lawmaker familiar with the legislation.
Paul Larson, president of the Connecticut Farm Bureau and a farmer in northeastern Connecticut, submitted testimony in advance of public hearings earlier in the session to support both bills.
HB 7175, he noted, would establish a Connecticut income tax credit for certain farm-related capital expenses including buildings, machinery and equipment, and is modeled after laws recently enacted in other states. It would also increase the municipal property tax exemption for farm equipment to $500,000 in assessed value from the current $100,000.
For SB 1183, Larson noted that farm equipment is exempt from personal property tax up to $100,000 of assessed value and the bill would expand that exemption from just equipment to include farm vehicles.
“In our opinion, Connecticut farmers would benefit significantly by raising the personal property tax exemption for farm machinery from $100,000 to $500,000 indexed annually,” Larson states. “The exemption has not been increased since 1985 …, when it went from $10,000 to $100,000.”
He added that the long-term benefits to Connecticut agriculture provided by both bills “will go a long way to help insure financial sustainability for many farms, both large and small.”
Organizations representing municipalities, however, oppose the bills.
Betsy Gara, executive director of the Connecticut Council of Small Towns (COST), said her membership can’t afford to lose the property tax revenue generated by farms in their communities.
While COST “has tremendous respect for Connecticut’s farmers and the difficulties they face in thriving in this state,” Gara states in her testimony that HB 7175 “simply shifts a greater tax burden to other already overburdened residents and businesses.”
She noted that municipalities are calling for cuts in their budgets due to reductions in state and federal funding and the rising cost of providing services.
“Given the ongoing fiscal challenges facing municipalities, the state must refrain from establishing additional or expanding existing property tax exemptions,” Gara added.
Similar testimony was submitted by Randy Collins, associate director of policy for the Connecticut Conference of Municipalities (CCM), which represents 167 municipalities in the state.
CCM opposes expanding “an existing unfunded mandate on our towns and cities by increasing the current property tax exemption for farm machinery from $100,000 to $500,000 of assessed value,” Collins stated.
He said municipalities “remain almost exclusively reliant on the imposition of a regressive property tax system” to fund local services, and that proposals like the tax exemption “would further increase property tax rates that already subsidize the current 100-plus mandated property exemptions.”
Collins added that CCM and its members have been asking the legislature “to stop adding to the regressive nature of the property tax by opposing new or expanding existing property tax exemptions. Our municipalities can no longer afford to pay for the exemptions and mandates that are adopted by the legislature.”
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