County supervisors would be allowed to eliminate a century-old statewide property tax break for owners of forest and fruit tree reservations under a bill advancing in the Iowa Legislature.
Iowa law fully exempts forest and fruit-tree reservations from property taxes, though the exemption runs out for orchards eight years after the fruit trees are planted.
Supporters of the bill, which include the Iowa Farm Bureau and the Iowa State Association of County Supervisors, said these landowners are unfairly benefiting from the exemption while other taxpayers pick up the tab for the cost of public services. Opponents said the bill would lead to further deforestation and environmental problems.
Steve Hoffman, a farmer from Lamoni, said small counties in southern Iowa are some of the poorest in the state.
“We understand there are counties that have [higher] valuations. They can lower their levy and still have more money than they need for everything,” he said. “Down south, we really need to do something, and this looks like a fair option.”
Some other farmers, hunters, and environmental and conservation groups opposed the bill. They said it would remove incentives for farmers to plant trees, reduce the state’s very limited forest land, and negatively affect Iowa’s outdoor recreation and water quality.
James Webster, a farmer from Chickasaw County, said the tax exemption has allowed him to take sensitive land out of production to plant trees. He said the bill would penalize farmers who are doing the right thing for the environment.
“We’re farmers, and if we have no incentive to continue to do the right thing to protect water quality, then the temptation is to farm right up to the stream banks and right up to the gullies,” Webster said.
Under current law, 832,340 acres will benefit from the tax exemption in the upcoming fiscal year. According to an analysis by the nonpartisan Legislative Services Agency, if all counties discontinued the exemptions, there could be a $10 million increase in property taxes and revenue for local governments.
The bill would also change the minimum forest or orchard acreage that makes a landowner eligible for the exemption. The minimum is currently two acres, and the bill would raise it to five acres, which would end the exemption for some landowners even if their county decided to keep it.
Matt Gronewald, a lobbyist for the Iowa Farm Bureau, said opponents of the bill are taking advantage of the program.
“If their trees were on fire, they’d expect a fire truck to show up,” he said. “If there’s trespassers on their land, they’d expect the police to show up. They use our roads and bridges, and they pay nothing for it. In fact, they shift that burden to other property taxpayers.”
Some farmers said out-of-state landowners are buying up forest land, charging people to hunt on that land, and not paying property taxes. The farmers said they would like to buy that land to expand their cattle operations, but they can’t afford it.
Some opponents of the bill said they would be open to modernizing the law, as it was initially established in 1906 and hasn’t been changed since 1984.
Eric Goranson, a lobbyist for the Iowa Bowhunters Association and Pheasants Forever, said residency requirements and more enforcement could help.
“We don’t have a lot of trees in the state, and we’d see further deforestation by removing the program, by putting it in the hands of people who have a vested interest in more revenue,” he said. “So we would like to see a compromise on this between this version of the bill and some of the others we’ve seen that will actually still incentivize forestry without just throwing the baby out with the bathwater.”
Republicans on a Senate subcommittee advanced the bill Tuesday after the House passed it in late March.
The House vote was 51-43, with nine Republicans joining all Democrats in voting against the bill.
