House Tax Committee advances $5-per-acre Ag Water Quality credit; funding source changed to Clean Water Fund

The House Tax Committee on a voice vote on Wednesday moved House File 363, the Ag Water Quality Certification bill authored by Representative Jacob, to the Legacy Committee after adopting an amendment that changes the proposed funding source from the state general fund to the Clean Water Fund.

The bill would create a $5-per-acre property tax credit for acres in an eight-county area of southeast Minnesota that are enrolled in the Minnesota Agricultural Water Quality Certification Program. Representative Jacob described the measure as a bipartisan pilot that “ties a $5 per acre tax credit to any acres in the outlined 8 county area in Southeast Minnesota that are enrolled in the Ag Water Quality Certification Program.”

Supporters said the credit is intended to expand participation in a certification program they called unique to Minnesota and to encourage adoption of conservation practices in a karst geology region where groundwater nitrate contamination has been raised by an EPA petition. Brad Jodahl Redland, identified in testimony as manager of the Agriculture Conservation Services section at the Minnesota Department of Agriculture (MDA), described the certification program as a whole‑farm risk‑assessment service that issues 10‑year contracts and tracks implemented practices. “We have more than 1,600 farms certified,” Redland said, and the department receives about $3,500,000 annually to support the Water Quality Certification Program.

Testimony from farmers’ organizations backed the bill. Hannah Bernhardt of the Minnesota Farmers Union, speaking both as a participant in the certification program and on behalf of the union, said the program provides “boots on the ground technical service providers to come walk your farm with you, identify risks to water quality and make a plan to address those risks.” Hunter Peterson of the Minnesota Farm Bureau Federation said the credit would help farmers overcome the up‑front expenses associated with some conservation practices.

Opponents and skeptical witnesses raised questions about measurement and accountability. Lori Cox, a Carver County farmer who said she served six years on an advisory board for the program, testified in opposition and argued the program lacks field measurements tied to water quality outcomes. Cox referenced statutory accountability requirements for Clean Water Fund recipients and urged stronger testing, governance and measurable outcomes before expanding taxpayer subsidies. “There are no actual measurements this program has to claim improved water quality outcomes,” Cox said.

Committee debate focused heavily on the amendment that shifts the bill’s funding to the Clean Water Fund. Chair Gomez and other members expressed concern about precedent for using constitutionally dedicated clean-water dollars to fund a property tax credit. Members asked MDA staff whether other states fund property‑tax credits out of dedicated environmental funds; MDA staff said no property tax credits are currently funded out of the Clean Water Fund.

MDA witnesses said the department does track outcomes for certified farms and provided program metrics during the hearing: the department testified to reductions it attributed to certification including reported annual soil and nutrient savings and a 45% reduction in nitrogen loss for certified acres, and said the program’s reported cost per certified acre equates to about $25 per acre on an acre‑basis (figure described by MDA staff as illustrative of their investment per certified acre).

After discussion, the committee adopted the H0363A1 amendment and recommended House File 363 as amended be sent to the Legacy Committee. The committee used a voice vote; the chair announced the motion prevailed.