Lawmakers back away from controversial farm property tax bill
SALEM — Intense opposition by Oregon’s farmers, ranchers and forestland owners has apparently convinced lawmakers to back away from altering key property tax provisions affecting agriculture and forestry.
Machinery used for agriculture and forestry is exempt from property tax assessments while property dedicated to producing crops, livestock and timber is less heavily taxed than other real estate.
Under the original language of House Bill 2859, the property tax exemption for equipment and the farm use assessment for land would expire in 2024 unless renewed by lawmakers.
The proposal evoked alarm in Oregon’s natural resource community, which turned out in full force at a March 1 hearing to argue that creating a “sunset” for these provisions would financially destabilize farming, ranching and forestry.
By the end of the hearing, the overwhelmingly negative testimony against HB 2859 seemed to have the desired effect on members of the House Revenue Committee.
“I’m pretty convinced putting a sunset on these things that are very long-term assets doesn’t make any sense,” said Rep. Phil Barnhart, D-Eugene, the committee’s chair.
At the beginning of the hearing, Barnhart said the bill was drafted in response to an audit from Oregon’s Secretary of State’s Office, which called for periodic review of existing property tax exemptions and tax credits.
In light of the objections to HB 2859, though, Barnhart said he thought the sunset provisions related to natural resources should be eliminated from the bill.
The suggestion drew no objections from other committee members, so Barnhart said they would only consider the remaining provisions of HB 2859 related to economic development and other issues.
“I think you should consider all of what I just said means that you win,” Barnhart told the audience, to enthusiastic applause.
Farmers, ranchers and forestland owners at the hearing emphasized that natural resource industries were already highly uncertain due to the weather and volatile markets.
Landowners said they shouldn’t also have to contend with the possibility their property taxes may rise dramatically every six years, which is the period of sunset review established under HB 2859.
“In the orchard business, we need to plan long term,” said Bruce Chapin, a hazelnut producer near Keizer, Ore.
Marsha Carr, a forestland owner near Monroe, Ore., said her annual property taxes would rise from about $1,000 to more than $25,000 under HB 2859.
Carr said her family harvests timber in small patches of five to seven acres, which preserves habitat for wildlife and songbirds.
“That would have to change to pay the taxes,” she said. “We would have to cut larger areas.”
Farmers rely on specialized equipment but they often operate it for only a month or less per year, unlike other industries where machinery creates revenues year-round, said Roger Beyer, a lobbyist for the Western Equipment Dealers Association and several crop organizations.
If property taxes were imposed on farm machinery, it would destroy demand for machinery, he said. “It would simply dry up and go away.”
Landowners also testified that property would unfairly be taxed at the maximum assessed value if the farm use assessment was allowed to expire.
Oregon’s land use system would still prevent landowners in farm zones from building homes or other high-value structures on their property, even if it was taxed as if such construction was possible, opponents said.
Mark Simmons, a rancher from Elgin, Ore., said the farm use assessment is part of a “grand bargain” between land use restrictions and property taxes.
While it’s currently tough to raise cattle on Simmons’ property, it could be a “gold mine” for development, he said.
“It’s mostly rocks and cheatgrass,” he said. “Some of those rocky hills with cheat grass have a view.”