Committee adopts CS to broaden farm-use tax deferments after debate on horses and flowers

The House Community and Regional Affairs Committee voted 4–1 on Tuesday to adopt a committee substitute to Senate Bill 200, a measure that updates which agricultural operations qualify for municipal farm-use property tax deferments.

Senator Jesse Bjorkman, sponsor of SB 200, told the committee the bill corrects an ‘‘unintended consequence’’ from the 2024 statute changes that left some farms—particularly those organized as S corporations—unable to qualify for the special farm-use assessment. ‘‘The new language in this bill relies on the IRS Schedule F to verify farm income but Subchapter S corporations are also eligible,’’ Bjorkman said, adding the change is meant to ‘‘ensure that all farms are treated fairly and consistently with other agricultural operations.’’

Testimony from farm-sector advocates emphasized the economic and food-security rationale for broader eligibility. Amy Sykes, policy director for the Alaska Farm Bureau, said excluding non-food operations creates an ‘‘artificial and damaging divide’’ and urged the committee to adopt inclusive language so peony growers, hay producers and other specialists that support the broader agricultural ecosystem remain viable. ‘‘A vibrant agriculture industry is an ecosystem,’’ Sykes said.

Peony grower Rita Jo Schultz said property-tax relief is not a handout but ‘‘an investment in preserving Alaska’s working lands,’’ and told the committee the recent statutory change cost her operation roughly $7,000. Theresa Brown, who coordinates Anchor Gardens and runs market-gardening operations in Anchorage, said including Anchorage in the exemption would help market gardeners scale up and improve city food security.

Members pressed witnesses and the sponsor on several technical points. The CS keeps a $2,500‑per‑year gross income test for qualifying farm activity (intended to limit the program to bona fide farm operations) and clarifies that retail-only businesses are excluded. Bjorkman said the intent is to limit eligibility to farm income: ‘‘the owner or lessee of the land must be actively engaged in farming and derive at least $2,500 of yearly gross income’’ from farm activity.

A central point of contention was whether the CS’s revised wording would exclude flowers or hay used for horses. The CS, as adopted, narrows some language tied to human consumption and revises the definition of livestock; co-chair Donna Mears and others said the change was intended to roll definitions back toward the pre-2024 wording, while others urged restoring more explicit animal-consumption language to protect hay and floriculture businesses. Senator Bjorkman acknowledged he ‘‘made a significant error’’ in a prior bill draft and said the current discussions aim to address that drafting problem.

The committee also discussed language to include land adjoining approved soil conservation plans to prevent assessors from stripping contiguous reserved farmland from farm-use consideration. Amy Sykes described soil‑and‑water conservation districts as the usual partners in developing those plans.

After extended discussion, the committee adopted the committee substitute with four yes votes and one no (Representative Garrett Nelson opposed). Co-chair Mears said the committee will continue refining the measure and set an amendment deadline for the following day. The committee is scheduled to take up SB 200 again on Thursday.

What happens next: the committee adopted the CS as its working document and set a target amendment filing deadline for noon the next day; members said additional clarifying amendments—particularly on horses, hay, and floriculture—remain under consideration.