Legislative committee hears briefing on Vermonts current-use tax program and continuing farmland loss

A state legislative committee heard a briefing from the agencys agricultural climate and land use policy manager about Vermonts use-value appraisal (current use) program, continuing loss of farmland and how the current formula affects the size of tax benefits for enrolled properties.

The presenter, Ryan, agricultural climate and land use policy manager in the administration division, told committee members that use-value appraisal remains one of the states most important land-use protection tools but has not stopped farmland decline: "we've lost 50% of the farmland since current use was passed," he said, and the program has only attenuated, not reversed, the long-term trend.

The presentation summarized recent data showing active agricultural land now represents about 9% of Vermonts terrestrial land base, while farms manage roughly 20% when farm-managed woodland is included. Ryan said the most recent U.S. Department of Agriculture agricultural census shows farms managed about 1.2 million acres in 2022, with roughly half in woodland and half in open agricultural land. He warned that open agricultural land is the most vulnerable to reverting to forest or to conversion for development.

Why it matters: committee members were told that farmland decline affects food security and climate resilience. The presenter cited a New England Feeding New England analysis that, to reach a regional goal of producing 30% of New Englands food locally, the region would need about 590,000 acres of additional cropland; Vermont alone would need a substantial increase from its current roughly 540,000 acres in farms to contribute to that target.

How the program affects taxes: Ryan explained the use-value appraisal for agriculture is calculated from a five-year weighted average of cash rental rates and a capitalization rate that incorporates a long-term Treasury-based interest rate, a risk factor and an effective statewide property tax. "As the ag use value goes up, your tax benefit goes down," he said, adding that the 2012to2024 rise in the agricultural use-value figure has nearly doubled the taxable amount in the program example shown in the briefing.

The presenter emphasized the program reduces tax bills for enrolled farms: in his simplified example a 100-acre parcel with an enrolled land value of $220,000 would save about $3,300 in property taxes compared with being assessed at full market value. But he cautioned that rising use-value figures driven largely by rental-rate and capitalization calculations reduce that relative savings over time.

Eligibility and program limits: committee members pressed on eligibility rules. The statutorily defined test for a qualifying "farmer" requires at least one-half of a person's annual gross income to come from the business of farming, and the presenter said that narrow definition can exclude long-time farm operators who work off-farm because agriculture alone is not financially sufficient. He described cases where landowners who subdivided small parcels and sought reenrollment were assessed land-use change tax because the lessee no longer met the statutes farmer-income test despite continuing to work the land.

Economic pressures and climate risks: the presenter referenced the 2022 agricultural census finding that 57% of Vermont farms had negative net cash farm income in 2022 and that farms combined to lose about $85 million that year. He also described climate-related threats (extreme rainfall, drought and heat stress) that have caused repeated crop and infrastructure losses, noting federal crop insurance and existing federal and state relief covered only a portion of recent disaster damages.

Discussion and next steps: committee members asked about whether development pressures are captured in the use-value calculation; Ryan said the use-value formula relies on agricultural rental rates and capitalization and does not directly incorporate non-agricultural market pressure values. Members also discussed the distribution of crop types in Vermont (for example, limited acreage in vegetables and berries compared with hay and dairy feed), the roles of state agencies and nonprofit groups that support specialty and vegetable producers, and the potential need for additional study or testimony. At the start of the meeting staff noted the Ways and Means Committee and the Education Committee will ask for the legislative committees recommendations on education-related funding matters tied to program changes.

The committee did not take formal action during this briefing; members requested additional information and follow-up testimony from agency staff and stakeholders.