A bill requiring a greater commitment to farming in order to receive substantial property tax benefits will be back before the County Council Finance Committee on Tuesday.
Bill 317, a product of a task force that met last summer, would do away with the so-called “nondedicated” agricultural exemption, and require commitment to a three-year period to qualify for reduced property values. The current 10-year dedication program, which has more generous tax breaks, will continue as before.
Currently, property owners taking the agricultural exemption pay taxes based on a set property valuation countywide, regardless of the market value of the land. For example, land used growing feed crops is valued for tax purposes at $1,000 an acre, while pastureland is valued from $28 to $420 an acre, depending on whether it’s poor, average or good pasture. Land growing truck crops is valued at $4,000 an acre.
Property owners who commit to keeping the land in agriculture at least 10 years — the so-called “dedicated exemption” — pay taxes based on half those values. There are an estimated 10,000 farmers in the nondedicated part of the program, compared to only 500 in the dedicated. The programs cost Hawaii County government about $28 million a year. “Somebody makes that up,” said Kohala Councilwoman Margaret Wille, chairwoman of the task force that recommended tightening the requirements.
Wille said she wants to encourage farming but at the same time eliminate the loopholes that allow property owners who aren’t farming to take advantage of the program at the expense of other taxpayers.
“This is an area where we have more complaints than any of them,” Wille said, referring to neighbors complaining of unfair application of the property tax breaks. “We want to encourage growing food on agricultural land.” Wille said she has changed the bill slightly after getting feedback from the county Finance Department and the Agriculture Advisory Commission.
The council Finance Committee had punted the issue last winter, saying it wanted the new council to take a look at it after the elections.
One of the new council members, Hilo Councilman Aaron Chung, said he’d read through the bill and still has questions, although he does agree that there should be laws governing agricultural tax breaks.
“This whole agricultural tax program is very complicated, and I know a lot of people have put a lot of time into it over the years,” Chung said. “But looking over the purpose and the bill, I don’t see the social policy that’s being enunciated, and even if they did, I don’t see the social policy that’s being advanced.”
Chung said the county may be better off hearing from scientists and agriculture experts to see which specific crops would best be grown on the island, and creating a list that would qualify for tax breaks. That would create more of an incentive for the commercial viability of agriculture on the island, he said.
The Finance Committee is scheduled to meet at 1 p.m. Tuesday at the county building in Hilo. Testimony will also be taken via videoconferencing from the Kona and Waimea council offices, the county facility in Kohala, Hawaiian Ocean View Estates Community Center and the Pahoa neighborhood facility.
