Agriculture Committee Learns about Cutler's Property Tax Legislation
10/22/2009
Rep. Bryan Cutler (R-Peach Bottom) spoke today to the House Agriculture and Rural Affairs Committee about the need for the Commonwealth to share the financial commitment of the state's Clean and Green program.
 
The program, created in 1974, allows farmers to receive tax benefits in exchange for keeping the land agricultural and preventing it from being developed. Since that time, nearly 8.5 million acres have been preserved. The program has provided numerous benefits, both environmental and financial, but state law is making it difficult for many rural school districts to shift the tax burden. As a result, they are losing millions of dollars in revenue to fund public education.
 
“I wholeheartedly support efforts to preserve Pennsylvania's precious farmland by assessing it at its agricultural use value instead of potential market value for other uses, but the state cannot unilaterally create programs that impact local taxpayers with no fiscal responsibility of its own,” said Cutler. “Allowing farmland to be assessed at its value as a farm makes sense, but doing so reduces the pool of taxable property, leaving homeowners to bear the burden. The state should step in and help communities that have seen their tax base disproportionately reduced as a result of large tracts of land being enrolled in Clean and Green.”
 
Cutler's House Bill 1788 would allow a local taxing authority to apply for state assistance from the Department of Community and Economic Development when it experiences a loss of 10 percent or more of its assessed value as a result of the preferential assessment of farmland. Cutler's legislation would permit eligible local governments to recoup 90 percent of the losses, allowing them to reduce the property taxes of every resident within its boundaries. 
 
Those testifying about the legislation included Thomas Newcome, Ph.D., superintendent of the Octorora School District, and Timothy Shrom, business manager for the Southern Lancaster County School District. Both of their school districts are losing nearly $5 million each per year due to the increasing number of properties and acreage enrolled in Clean and Green.
 
Due to 2004 state law, even if the districts were to increase property taxes at the maximum rate each year, tax revenue would not recover the lost revenue. In fact, in Solanco, 90 percent of tax bills are paid by people, not entities. Although the school district has the lowest property tax burden in Lancaster County, it also has the highest earned income tax rate.
 
“We have taken all measures to spread out the burden, but there are not enough people to make it fair,” Shrom said. “This falls disproportionately on rural areas, and ironically, on the tax base it was meant to protect.”
 
School districts that are impacted the most are located in rural areas where leveling the tax burden hits households with fixed and lower per capita incomes. Also compounding the situation is the difficulty of attracting economic development opportunities since business and industry shy away from sparsely populated areas.
 
“Economic development in rural areas is very challenging,” Newcome said, noting he and others have been working toward smart development and bringing industry into already-developed areas, instead of using open space and farmland.
 
Cutler, along with several presenters of testimony, spoke of the numerous benefits of Clean and Green as a reason why the Commonwealth should share the financial commitment. Not only does farmland reduce various forms of noise and air pollution, but the deterrence of high enrollment in the local schools equates to less overall need of state money for education.
 
“As we have more properties enrolled in Clean and Green and since we’re locked in with other legislation, school districts are limited to where they can go to recoup that lost money,” Cutler said. “This is really at the crux of the issue. Obviously, we have to maintain a balance between preserving farmland and controlling property taxes in the Legislature, and I appreciate the interest in this legislation.”
 
Also testifying at the hearing were the director of the Bureau of Farmland Preservation for the Pennsylvania Department of Agriculture; and representatives from the Pennsylvania School Boards Association and the County Commissioners Association of Pennsylvania.
 
Rep. Bryan Cutler
100th District
Pennsylvania House of Representatives
(717) 786-4551
(717) 783-6424
Contact: Jennifer Algoe Keaton
jkeaton@pahousegop.com or (717) 705-2094
Member Site: RepCutler.com