Economic barriers to wetland restoration in agricultural landscapes
Unfortunately, state property tax policies impede the progress of these wetland restoration efforts. To help preserve farmland and rural economies, Wisconsin passed legislation in 1995 to assess agricultural lands based on their use (production) value, rather than their development value. The result was a substantial decline in property tax bills for all lands classified as "agricultural lands." A side-effect was the creation of a sometimes substantial differential (e.g., as high as 300-400%) between the property tax per acre of lands in agricultural production and adjacent conservation lands (e.g., restored wetlands, stream buffers, etc.).
The extent of this problem varies by tax district. Tax treatment of the restoration of previously farmed wetlands also depends upon the program through which the land was restored. For example, under Wisconsin’s agricultural use value law (Tax 18), marginally productive farmlands enrolled in the Conservation Reserve Program, Conservation Reserve Enhancement Program or Environmental Quality Incentives Program maintain their agricultural land classification. Identical lands restored through the Wetlands Reserve Program, U.S. Fish & Wildlife Service Partners for Wildlife program, or voluntarily, are reclassified as undeveloped land and lose eligibility for agricultural tax breaks. Stream buffers are also classified as undeveloped land and thus subject to this same treatment.
Feedback from wetland restoration program managers confirms that enrollments in U.S. Department of Agriculture and U.S. Fish and Wildlife Service sponsored restoration programs have declined due to property tax concerns. Federal allocations for some programs (e.g., Wetlands Reserve Program) are based on landowner interest and contract backlogs, so this problem has contributed to decreased allocations of federal Farm Bill conservation dollars to Wisconsin.
In cases where the tax differentials between agricultural and undeveloped lands are high, there is a strong financial disincentive for farmers to restore wetlands or implement other voluntary conservation practices. In these cases, many farmers choose to keep marginal croplands in production or to pasture cows in wetlands and across streams to keep their property tax burdens low.
Despite a 2004 law change will requires the assessment of undeveloped lands at 50% of fair market value, property tax burdens on restored acres can still be substantially higher than on agricultural lands in some tax districts.
Removing economic barriers to wetland restoration in agricultural landscapes
In 2004, WWA launched a project to study the extent of economic barriers to wetland restoration in agricultural landscapes and to advocate for policies and programs to remove these barriers. This work is ongoing. Though we have had substantial contact with cabinet level officials at the Department of Natural Resources, Department of Revenue, Department of Administration, and Department of Agriculture, Trade & Consumer Protection, to date we have received no commitment from any of these agencies to address wetland property tax concerns.
WWA has advocated for a revision to the definition of Agricultural Land under Tax 18 to address the concerns described above. We would like to see eligibility for use value property tax assessment applied consistently to government subsidized and voluntary conservation activities conducted in Wisconsin’s working landscapes. This can be accomplished with the following changes:
A. Replace the abbreviated list of eligible programs included in Tax 18.05(1)(d) & (e) (download PDF)with a more inclusive statement allowing the definition of agricultural land to include lands subject to easement or agreement under federal, state and local conservation programs designed to meet soil erosion control, water-quality improvement or wildlife habitat enhancement goals, provided that the land was in agricultural use under par (a),(b) or (c) at the time the easement was acquired.
B. Add criteria expanding the definition of agricultural land to also include lands installed in voluntary practices consistent with farm conservation standards outlined in ATCP 50.98 and ATCP 50.83 for the purpose of improving soil erosion control, water-quality improvement and wildlife habitat, provided that the land was in agricultural use under par (a),(b) or (c) at the time the practice was installed.
These simple changes would tie the types of agricultural conservation practices that are eligible for use-value assessment to the conservation practices themselves rather than to a subset of the programs that fund them. This is consistent with the implementation strategy for ATCP 50, which stresses voluntary compliance of agricultural conservation practices in the absence of cost-share dollars. There is nothing proposed in these recommendations that would change farmer eligibility for use-value assessment for more traditional farming practices (e.g., crops, pasturelands, & specialty lands recognized in Tax 18.05 a, b & c).
Information and publications
1. What Does it Cost to Own a Wetland: A Guide to Property Tax Assessments on Wetlands and Other Privately Owned Wisconsin Conservation Lands
2. To view maps showing the difference between the average property tax per acre of agricultural land and undeveloped land, by tax district, click here. Maps were produced using data provided by the Wisconsin Department of Revenue.
3. Economic Incentives to Encourage Conservation on Wisconsin’s Private Lands: Models for Consideration. This report documents how other Midwestern states tax wetlands and agricultural lands and report on state-supported incentive programs used to encourage wetland protection and restoration throughout the region.
4. Economic Penalties for Restoring Wetlands on Marginally Productive Croplands: Case Studies on Property Tax Inequities in Wisconsin. Link to be added soon
Wisconsin Wetlands Association Publication Helps Landowners Evaluate Eligibility for Property Tax Breaks on Wetlands and Other Conservation Lands
What Does it Cost to Own a Wetland? A Guide to Property Tax Assessments on Wetlands and Other Privately Owned Wisconsin Conservation Lands (download a PDF version of the guide, 0.5 MB) is designed to help landowners anticipate the property tax consequences of wetland restoration decisions and to ensure that the wetlands they currently own have been properly assessed and taxed.
The publication explains recently enacted changes to Wisconsin’s property tax code that call for some wetlands, namely those classified as "undeveloped lands," to be assessed at 50% of fair market value. "In some parts of the state, the cost of holding conservation lands has become prohibitively expensive due to increasing tax burdens," states Wisconsin Wetlands Association’s Wetland Conservation and Policy specialist, Erin O’Brien, "This tax break is a step in the right direction for removing those economic barriers to wetland protection and restoration - we want to make sure wetland landowners know about it and receive the break if they qualify."
The guide also helps natural resource professionals answer landowner questions about the tax implications of wetland restoration and other stewardship decisions.
The guidebook was produced as part of a larger Wisconsin Wetlands Association initiative to encourage the state to provide more economic incentives for conservation activities on private lands. "50% of the state’s wetlands have already been lost and, of those that remain, 75% are on private property," says O’Brien. "These wetlands improve water quality, reduce flooding and provide important wildlife habitat. We think landowners should be rewarded, not penalized, for caring for these lands on behalf of their community." Wisconsin Wetlands Association is working diligently on this issue and encourages landowners impacted by rising property tax burdens on conservation lands to contact WWA and their elected officials with the details of their concerns.
Copies of What Does it Cost to Own a Wetland? can be downloaded for free by clicking the cover image at the top of this page. Hard copies can be requested by contacting Wisconsin Wetlands Association, 222 S. Hamilton St., Madison, WI 53703, 608-250-9971.
Guidebook content includes:
- Basic Principles of Property Tax Assessment
- How Undeveloped Lands (including wetlands) are Valued
- Wetland Assessment Exceptions
- Valuation of Lands Under Conservation Easement
- Estimating Tax Consequences of Owning Wetlands
- Reviewing the Classification and Assessed Values of Your Property
- Navigating the Assessment Appeals Process
Have property tax concerns prevented you from restoring wetlands on your property? Have your property taxes increased substantially following the restoration of wetlands on your property? If so, please call or write to share your story and copy your state representatives to call their attention to your wetland property tax concerns.
Contact information for your representatives in the Wisconsin State Legislature can be found at: http://waml.legis.state.wi.us/ .
Rising property tax burdens discourage wetland protection & restoration