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Preserving Farmland – Supporting Small Farms

HB 1437 and SB 5327

Concerning small farms under the current use property tax program for farm and agricultural lands

The Current Use Property Tax Program Goal is to Preserve and Maintain Farmland
Under the Open Space Taxation Act, enacted in 1968 by the voters of Washington, qualifying farm land is taxed based on a “current use” valuation rather than the fair market value. The tax difference is shared among all property owners in the county. The goal is to encourage the preservation of farm land by lowering property tax values. This reduces property taxes and the cost of doing business. And this helps farmers keep farming.

Both Small and Large Farms Participate in the Current Use Program
Land in the program is classified by acreage; for the purpose of this program, small farms are considered under 20 acres and large farms are 20 acres and over. All enrollees must be engaged in commercial activities and are subject to examination by the County Assessor.

Small Farms Need the Same Tax Treatment as Large Farms
On a large farm, all of the land, including the land under the farm residence if it is integral to the farm operation, is taxed at current use. This makes sense because this land contributes to the farm. Yet, today small farms are taxed at fair market value on a one acre lot around their farmstead, no matter how the land is used.

Taxing One Acre of a Small Farm at Fair Market Value Does Not Make Sense

  • Small farms are taxed at fair market value for a one acre lot around their farm residence; a one acre lot that does not exist and cannot be sold.
  • Taxes on this one acre are a financial burden to small farmers in our urbanizing areas, along our transportation corridors, and throughout the state.
  • We are at risk of losing our small farms.

The Proposal – Both Large and Small Farms Should Be Eligible for Current Use Valuation on all Their Land
If the farm residence is integral to the farming operation then the land under the farm residence should be valued at current use, not fair market value.
Fiscal Impact – Modest Shift and Loss – Important Community Investment in Preserving Farm Land

  • There will be a small shift of taxes to all taxpayers in the taxing district. And some tax districts are at their rate limit so will experience losses.
  • Today the taxes are borne just by the small farmers. This proposal results in all of us sharing the burden.

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