The House Agriculture and Rural Affairs Committee this week held a public hearing on issues surrounding the state’s Clean and Green program which provides farmers property tax assessment reductions for permanently preserving farmland.

Specifically, the Committee heard comments on several pieces of legislation including: House Bill 656 (Bastian-R-Somerset) that would allow Clean and Green participants to exclude the portion of a preserved farm dedicated to a wind farm from the program, House Bill 667 (Sonney-R-Erie) amending the provisions relating to the removal of special tax treatment under the Farmland and Forest Land Assessment Act and House Bill 1960 (Hershey-R-Chester) reimbursing municipalities for property tax revenue lost if 10 percent or more of assessed value was under the Farmland and Forest Land Assessment Act.

Rep. Mike Hanna (D-Clinton) serves as Chair of the Committee and Rep. Art Hershey (R-Chester) serves as Minority Chair.

Agriculture Secretary Dennis Wolff said the Clean and Green Program is critical to the financial health of farmers because it makes property taxes affordable and as a result keeps farmers farming.

He expressed concerns about mini-estates that can qualify for the preferential assessment program, saying that was not the intent of the law. He also said his agency is working with counties to develop a uniform approach to handling natural gas drilling rights in the Marcellus Shale formation that farmers are leasing to provide additional income.

Secretary Wolff said the tax rollback provisions of the Clean and Green Program are triggered only when there is a “material alternation” of the land surface, not when a lease is signed, except in Allegheny County.

John Bell, Governmental Affairs Counsel for the PA Farm Bureau said his organization strongly supports the Clean and Green Program and identified several areas of the law for clarification—

· Allowance for gas and oil leasing and exploration: prescribe in statute the legal position reflected in regulations before 2001, which recognizes that use of Clean and Green land for gas or oil extraction is authorized under the Act and that no tax consequences will befall a Clean and Green landowner who authorizes or conducts gas or oil well drilling or extraction activities on his or her land;

· Classification of lands that are part of working farms: consider enacting provisions to give clearer statutory guidance to county officials in their analysis and determination of how to classify working farms under the Act;

· Providing more constant application of assessment values; and

· Allowance for alternative energy development. Legislation such as House Bill 656 impose limited and more financially manageable tax consequences for the use of Clean and Green lands for development of wind-powered energy generation.

Kristen Goshorn, County Commissioners Association of PA, said the only source of revenue for counties were property taxes and recommended the General Assembly offset the tax exemptions they grant with funding.

Dr. Marc McDill and Dr. Mike Jacobson, Penn State School of Forest Resources, said any changes to the Clean and Green Program should be done carefully to benefit both farmland and forest land owners. Among other changes, they recommended—

· Only update Clean and Green assessed values when a re-assessment is done for the entire county;

· Another relatively simple change would be to place a cap on Clean and Green assessed values at some fixed percentage - say 50 percent - of fair market value;

· Additional reductions should be applied for having an approved management plan, being "Green Certified," or for having a conservation easement on the property;

· To address the "mini-estate" problem, increase the minimum acreage for being in the program, for example to 20 acres rather than 10; and

· Apply a single, low tax rate, such as one dollar per acre per year, to all forested properties in the program.

Other witnesses providing testimony were: Louis D’Amico, Executive Director of the Independent Oil and Gas Association of PA, Robert Hume, Octorara Area School District, Chester County and Eric A. Brown, Chief Assessor Wyoming County.

7/18/2008