Debunking Misinformation About Vermont’s Current Use Program

In light of the down economy, Vermont, like many states in our region, is looking for ways to reduce its annual budget. Last year, the legislature attempted to take $1.6 million from the Use Value Appraisal (Current Use) program, a conservation measure that taxes land on its value for agricultural and forestry uses and not on its development potential. The cut failed, but the legislature is expected to attempt to take the same amount or more in the 2011 session. The following are some claims or myths being floated by those who take issue with the program and some facts to help forest landowners counter them.

The current use program is an entitlement program.
In an entitlement program, money is given away to an individual with no expected return. Also, the individual is not required to pay any money into the program at any time.

Under the current use program, land is taxed at a fair and equitable rate based on the current use of the property and not on a potential development or residential rate. In exchange, the forest landowner has to: enter into a long-term contract (which includes withdrawal penalties) with the state of Vermont; pay a consulting forester to develop a long-term forest management plan; harvest timber in accordance with the plan and be overseen by a Vermont county forester; abide in strict accordance with Agency of Natural Resources regulations and terms of the contract; pay to update the plan every ten years; and still pay annual property taxes based on the land’s actual current use. Would you still call current use an entitlement program?

The current use program costs the state of Vermont money.
There are approximately 12,000 property owners who are enrolled in the program, 8,000 of whom own forestland. Of the 5.4 million acres of land in Vermont, 4.5 million acres are forested, and 2 million of these acres are enrolled in current use.

Because the state reimburses towns for “lost” tax revenue associated with current use, the program ends up costing $45 million, or $75 annually for each Vermonter. What return do Vermonters get for this $75? The logging and wood industry alone generates $1.4 billion in revenues annually. Tourism, with over 4 million visitors annually, brings in over $1.0 billion a year. Snowmobiling contributes over $500 million annually, while fishing, hunting, and wildlife contribute $375 million to the Vermont economy. Pieces of that $3 billion find their way into most Vermonters’ pockets.

If your company had overspent in non-income-generating departments, would you jeopardize or adjust a department’s budget of approximately $45 million annually that was a major contributor to generating over $3 billion in annual income?

The current use program only benefits those who are enrolled, and out-of-state residents benefit the most from the program.
The current use program protects Vermont’s working landscape, which provides employment and revenue to its residents, as well as clean air, water, and recreational opportunities to residents and tourists alike. Vermont residents owned 76 percent of the land enrolled in current use in 2006, which tracks closely with how much Vermont land is owned by Vermont residents. Out-of-state owners are not disproportionately enrolled in the program.

The current use program is a tax dodge for developers flipping land sales.
Fears of “land banking” in the current use program are without substance. In 2006, 4,497 acres, or about 0.2 percent of the 2 million acres of enrolled land were taken out of the program. In 2007, 2,700 acres were removed. In 2008, 3,286 acres were withdrawn, and the state collected $654,000 in penalties. At this withdrawal rate, it would take seven years before even 1 percent of land would be withdrawn from the program. And this number does not include the new people who enroll in the program each year.

The more land in a town that is enrolled, the heavier the tax burden on other local taxpayers.
This is a myth. Use value taxation is structured so that towns are held harmless for the cost of the program. The towns are reimbursed by the state and the tax burden is spread equally across all taxpayers in the state. Studies of the cost of community services have repeatedly shown that open or forest land, even in current use, pays more in taxes than it requires in services.

Wealthy landowners “milk” the program.
Seventy six percent of Vermont farms are enrolled in current use, and the program reduced property taxes on dairy farms from $9.4 million to $0.9 million in 2005, effectively increasing net earnings from $10 million to $18 million that year. In 2006, the net earnings for Vermont’s dairy farmers were a loss of $19.7 million and would have been a loss of $28 million without the current use program.

The next time someone complains to you about your land being in a current use program, ask them how they would feel if their house was taxed at commercial development value rather than at its “current use” as a residence. Why should farms and forests that aren’t subdivisions be taxed as if they were?

Trevor Evans, of Derby, Vermont, is the 2010 northeast regional outstanding tree farmer of the year and a board member of the Vermont Woodlands Association.

 
Discussion
  1. Ron Chase → in Kirby, VT.
    Jun 27, 2011

    Why should people in current use be allowed to post the land?

  2. Chuck Wooster → in Corinth, VT
    Jun 28, 2011

    Hi Ron—

    I think the answer to your question is that the current use program in Vermont, especially as it was originally conceived, is a jobs program more than a land-access program. The idea is to make sure that land is available for forestry and agriculture and all the people those industries employ. Perhaps because land posting was much less pervasive a quarter century ago when the program was designed, it wasn’t directly addressed by current use.

  3. James Curtin → in Washington, Vt
    Sep 04, 2012

    If current use is suppose to be a state “jobs program” for the timber industry, why are the jobs influenced by what seems to be a handful of consulting foresters? There could be many more small logging operations in business if the state was involved in fairly dividing out the work.

  4. Greg Fuller → in Barre,VT
    Feb 19, 2013

    From http://www.treefarmsystem.org/trevorevans - “Trevor Evans owns almost 1,000 acres that he has acquired in bits and pieces over 28 years in Derby, Vermont.”

    A quick google search shows that the author has a vested interest in this programs existence - which is good to know where where he is coming from.  I am sure there are many positives regarding the VT land use program but with property taxes skyrocketing in Vermont (and no end in sight thanks to Montpelier) I think someone who has the benefit of owning 1000 acres in Vermont could also afford to pay a little more in property tax.  I’d be more in favor of a plan to support dairy farm land separably and to expand federal and state park land that can be open to all.  Maybe the question should be why should someone be expected to pay more in residential property taxes without any breaks while someone else can be cut a deal for being a land baron in VT?

  5. dave → in corinth
    Feb 20, 2013

    It’s a good question, Greg. But the state would argue, and i think rightly so, that residential property and working forestland are two very different things. A residential property benefits from (relies upon) town roads, town utilities; its tax rate is based on the costs of these services and its value as a residence. The whole point of “Current Use” is to tax forestland as what it is—forestland. If a landowner has a home on the parcel that is enrolled in the program, the house and the two acres around it are NOT eligible for a tax break. They’re paying the same rate you are on their residence. By signing up for a reduced rate on their forested acreage, a landowner is committing to keep their forest as forest, which keeps Vermont rural, and participate in the local wood economy, which keeps foresters and loggers and mills and truckers and gas stations and saw shops and country stores and all the other parts of the rural economy going. This “working” part is mandatory—every parcel enrolled in UVA is actively managed—so the tax break is not just money for nothing.

  6. Tavis Morse → in Cabot, VT
    Sep 20, 2013

    This article pops up in the top 10 in a Google search for “vermont current use” so I’m going to post my gripe here. Hopefully it may help others to avoid the issues we are facing. We have 50 acres in current use and are far from “land barons”, I think it is a great program to keep development from taking over as it has in other states.

    The Tax department which runs current use has an insidious new form to be filed by anyone in current use who wants to take a bank loan. It is called the subordination form - this allows the bank first dibs over the current use program in liens against the property. As part of the paperwork process (which will hold up your loan for over a month) there is a “routine” check to “update documentation”. They compare your current use land map to an updated aerial photo with an overlay of the latest grand list boundaries. If the hand drawn sketch from 20 years ago on your old plan happens to look a little different from the online database, get ready to bend over!

    In our case the 2 acres excluded from current use for our house on our old plan did not match what the computer screen showed, so we will be paying to add a new exclusion area, plus paying a forester to redo the plan, plus paying taxes on the old exclusion area until we can get it re-enrolled, all because of what boils down to a clerical error!

    Now Northern Woodlands is not our forester, but I can only imagine the filing cabinets full of old incorrect maps just waiting to generate revenue for the Tax department and the map makers as people try to get mortgages or take new loans.

    It’s these type of shenanigans in government bureaucracy that really stick it to the little guy. If I was one of those wealthy out of state landowners I’d get my land out of current use as fast as I could and put up condos instead.

  7. David Brynn → in Vermont Family Forests
    Sep 22, 2013

    As long as we tax forestland, it is essential that it be taxed on its current use as opposed to its development potential. The Current Use Program does this.

    But the time has come to realize the ecological benefits of wild, self-willed forests—clean water, carbon storage, wildlife habitat, resistance to invasive exotics, and more.

    Wild forests are “working forests” too!

    Our definition of forest products has traditionally recognized timber, firewood, and chipwood and non-wood forest products such as maple sap.

    It is time to follow the UN FAO’s lead and to recognize forest ecosystem services such as water filtration, flood reduction, soil stabilization, carbon sequestration, forest-based recreation, to name a few as forest products.

    The Current Use Program should as well.

  8. tim soutiere → in cambridge
    Nov 01, 2013

    I think a new revision is needed to open these lands to the public for current use. The states’ departments need to start working together. Fish and Game is trying to get more land opened to hunting, this would be a great way!!! How does that ball get rolling?

    Here’s a question; should the land owners be allowed to do the logging of their own land-use property? That’s putting money directly into their pockets after they have received the break.

  9. Peter Szymkowicz → in United States
    Jun 11, 2014

    Check your Town’s Annual Report. If, as here in Shoreham, VT, your town is using an “Adjusted Grand List”,( the Grand List minus the assessed value of property enrolled in the Current Use program), to compute the annual tax rate, then non-enrolled property owners in your town are being charged a tax rate that is inflated by that difference between the Grand and Adjusted lists. The State of Vermont collects that extra money then returns the portion that represents the municipal revenues lost- the infamous “Hold-harmless” payment. The State sends that check to your town almost a year later, Shoreham usually gets its check the week before property taxes are due. Some would say this is floating a check. I think “Hold-harmless” means the towns hold the State harmless from prosecution for theft because Vermont has taken this extra money from a town’s citizens without the consent of the governed. Shoreham residents do not vote to participate in the Current Use program, but non-elected persons in Waterbury compute a tax rate that increases the liability for non-enrolled property owners in our town. The state of Vermont has to pay for the management of the Current Use Program, but it is each Town’s property owners who pay extra tax to cover the lost revenues for their town’s enrolled owners of the Current Use Program. Maybe Bernie Madoff has a web-site or blog-post that would explain this better than I can.

  10. Dave → in Corinth, VT
    Jun 12, 2014

    In response to these thoughts, Peter, I’d ask why someone’s open woodland—land that requires no municipal services—should be taxed at the same rate as a residential building lot which requires plow trucks and road maintenance and probably schools and water and sewer. They’re not the same thing—which is the whole point of Current Use. If land is forest, the town shouldn’t pretend it’s a building lot and tax it at the same rate. If we’re going to start taxing things on their potential and not what they actually are, then we should start taxing farmers on what they could theoretically make if they were wall street executives. Think of all the money we’re losing by simply taxing them on their meager income.

  11. Peter Szymkowicz → in United States
    Jun 13, 2014

    Dave,
    If Current Use is so good for Vermont, then all Vermonters should pay from the general fund, not just the residents of each town who are forced to pay a tax surcharge because Property Valuation and Review uses a town’s Adjusted Grand List to figure their tax rate. Realtors advertise open land as having low taxes because it is enrolled in CU, but the asking price and eventual selling price is not the CU value but many times that ridiculously low assessment. This is supposed to be a democracy where citizens have the right to vote for fair representation. Vermont’s Current Use as offered and implemented by PVR is more like a medieval tribute paid by vassals to the landed gentry, without the right to vote for fair taxation. Unlike the “Tea Tax” demanded by KIng George in colonial America, where it could be avoided by not buying, Current Use imposes a tax without recourse, unless one sells their property and leaves that town for a town that does not participate to the extent that it is a burden, like Shoreham; where land owners have enrolled 15% of the Grand List assessed value, and that surcharge is levied on the residents of Shoreham, not Corinth.

  12. Carol Denardo → in Rutland, Vermont
    Sep 02, 2014

    Our dairy farm has been run by my family for nearly 100 years. Most of that time, the land was open to hunters. However, some hunters have no respect for our property. They cut fences, shot at electric fence boxes, drove four-wheelers which dug up roads, refused to wear red or orange clothing and one hunter narrowly missed shooting my father while he was leaving the woods. In addition, many deer have been shot illelegally and left to rot. Therefore, before my Father passed away, he and my brothers decided to post our land. We still have a guy, on the Rutland Town Selectboard mind you,who still rides his four-wheeler over other posted land, brings his buddies and sneaks onto ours despite the posted signs! This “hunter” writes for Sam’s Good News and has often complained about people trespassing on his land. He has often approached people who were on Rutland City property and badgered them as to what they were doing! It’s people like this guy who drive farmers crazy so they post their land. Then, to make matters worse, this same guy has the audacity to complain about farmers who are in the land use program because they won’t open the land to people like him. He claims people like him are enabling farmers to get the land use rates. He has a sense of entitlement, albeit self-perceived. It’s people like him and groups of trespassing snow-mobile riders who ruined it for the average hunter. I don’t blame my family for posting and I doubt any of you will either!

  13. Marc → in w.Windsor
    Oct 07, 2014

    I agree with the CU in principle but I’m pretty sure it’s the forest getting screwed. Our neighbor just had her regularly scheduled “logging” done, which I was assured by the logger would be a “selective cut”.

    If I wanted them to preserve the bike trail I could flag it every fifty feet. Naively, I spent an afternoon doing just that. What a joke. Even the state forester I got out here to have a look called it a “clear cut.” Nary even a seed tree left standing in the 5 acre gash in the forest.

    It’s hard to reconcile something that’s supposed to be protective of Vermont’s environment with DESTRUCTION of that environment. I know, I know, it will all grow back eventually. When I’m old and grey. So I said well, at least it must have given scores of loggers food on their table. I met the loggers. Not including the guy who drives around from site to site, there were three. Who were about .0001 percent by mass of their diesel-guzzling, out-of-state-made machines….

    What is there to keep the loggers from taking everything?

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