June 22, 2009Client Alert

Taxation of Agricultural Lands

On Wednesday, June 17, 2009, Senate Majority Leader Russ Decker and the Senate Democratic Caucus inserted language into the State Budget Bill (Assembly Bill 75) which would eliminate the Agricultural Use Value Taxation provisions in the Wisconsin Statutes. Under current law, so long as land is actually in agricultural use, it is to be taxed as agricultural land even if it is re-zoned or subdivided or has otherwise received entitlements related to future development. This Agricultural Use Value provision has been in the Statutes for 15 years and has allowed for meaningful development activities which are consistent with the State’s “Smart Growth” long-range Comprehensive Master Planning requirements. Under the current system, once land becomes development eligible, it is not immediately taxed at a higher rate which would then force premature development. Rather, the land will continue to be taxed as agricultural land until it actually changes use and allows a methodical development into a different and more urbanized use. This provision, because it was inserted at the last minute and without warning or an opportunity for public debate, has become a hot button of controversy.

Among the problems with changing the rules in the middle of the game are that most developers have come to rely on long-range planning conducted by both the host community as well as the developing community. Artificially accelerating development does not help the planning process. In addition, financing packages with banks and other lending services have been carefully made in reliance upon the continuation of the agricultural use value provisions. Finally, repeal of this provision will create a dynamic to take land out of agriculture.

It is anticipated that the budget will be presented this week to a Budget Conference Committee where differences between the Assembly and Senate versions of the budget bill will be worked out. Governor Jim Doyle has asked that the budget be ready for his signature by July 1, 2009.

If you would like further information on this subject or counsel as it relates to lobbying in opposition to this provision, please contact one of the authors of this client alert.

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