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JFO: H.273 would cut state revenue by $4.9M–$10.6M by expanding current-use and lowering withdrawal tax
Summary
Ezra Holden of the Joint Fiscal Office told lawmakers a proposal to expand current-use eligibility, include equine operations and reduce the land-use-change tax rate would lower education and general fund revenue by an estimated $4.85 million to $10.63 million, with large caveats due to limited data.
Ezra Holden, analyst with the Joint Fiscal Office, told lawmakers at a legislative briefing that House Bill H.273 would change three aspects of Vermont’s use-value appraisal (current‑use) program and that the Joint Fiscal Office (JFO) estimates a statewide revenue reduction between $4,850,000 and $10,630,000 if the bill’s provisions take effect.
Holden said H.273 contains three principal changes: lowering the income threshold for someone to qualify as a “farmer” for current‑use from 50% of gross annual income to 25%; reducing the land-use-change tax (LUCT) rate from 10% to 6% of full fair-market value at withdrawal; and expanding the statutory definition of farmer to include persons who “raise, feed or manage equine.”
Those changes would expand eligibility for the use-value program and reduce the penalty collected when enrolled land is withdrawn for development. Holden presented a low-end and high-end fiscal range for each change based on available data: farmer‑by‑income expansion $1.5M–$4.0M; LUCT rate reduction $0.60M–$0.63M; and equine‑related expansion $2.75M–$6.0M. The combined result is the $4.85M–$10.63M range.
Nut graf: The revenue impact would be split among the education fund and the general fund because of Vermont’s hold‑harmless payments to municipalities. Holden said most of the effect falls on the education fund and provided fund‑level estimates (education fund roughly $7.675M high‑end; general fund roughly $3M high‑end), but he emphasized the underlying data are sparse.
Holden explained how the funds are affected: municipalities receive up to half of the LUCT (capped at $2,000 per parcel) and the remainder of LUCT receipts are split 75% to the education fund and 25% to the general fund. Separately, reductions in enrolled property tax base affect the statewide education tax rate because the education fund is funded through a statewide equalized rate.
Holden repeatedly cautioned that the estimates rely on limited and imperfect data: current use enrollment records do not reliably identify overlaps between enrollment categories, parcel contiguity, or how many individuals would enroll if eligibility changed. He told the committee, “I did not want to come up here and give you numbers that we don't have really good data behind.” He also noted H.291 was referenced to the committee but that JFO currently does not have sufficient data to estimate that bill’s effect.
Lawmakers asked follow-up questions about how parceling, multiple parcels per owner, and existing enrollment paths (for example, parcels under 25 acres with $2,000 crop sales) affect the estimates. Representative Robert Emelykowski asked, “I just wondered what makes up the difference in the Ed Fund because that's coming out of property tax too. So I assume there's loss there to a municipality.” Holden replied that reductions in tax base lead to adjustments in the statewide education rate and that municipal impacts are made whole through general‑fund payments.
Holden also cited a survey by the Forest Council of Vermont and a public survey published by the Horse Council of Vermont to justify assumptions about equine operator enrollment likelihood; he used a 47% participation assumption drawn from the equine survey for one of the scenarios. He flagged that some equine owners may already be enrolled under other criteria, which could reduce the incremental effect.
The JFO did not model behavioral responses (for example, whether a lower withdrawal penalty would prompt more enrollments or withdrawals) and described its results as an initial range for committee consideration. Holden offered to provide further analysis if the committee wanted more refined estimates and signaled that an associate would present on a related land‑use tax bill next.
Ending: The JFO urged caution in interpreting the estimates and recommended additional data collection and review if lawmakers want more precise fiscal numbers before taking legislative action. The committee proceeded to hear a second JFO presentation focused on LUCT valuation rules and affordable‑housing exemptions.
