Farmers, environmentalists unite to try to protect family farms

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By Tom LoBianco

Farmers getting pinched by Maryland's estate tax could get some relief soon, but not likely this year.

Lawmakers have been pushing for more than three years to give family farmers a waiver on the tax, citing the growing squeeze on family farmers facing increasing land values and major tax hits each time land is passed down a generation.

The bill has failed in the last two sessions, but supporters are taking a new approach this year, looking to the environmental community for help.

Farmers, particularly those with waterfront property, have land which acts as a natural environmental buffer, said Delegate Sue Kullen, Southern Maryland Democrat and lead sponsor in the House.

"It's in the best interest of the state because they're trying to preserve land, but they can't preserve all the land they want to," she said.

The bill would exempt families from having to pay the state's estate tax as long as they keep their property as farmland for 10 years after it is handed down to the next generation. Any family who sells the land to developers, or in any way changes it from active farmland, would have to pay back the estate taxes that were waived.

The measure has received broad bipartisan support. House Minority Leader Anthony J. O'Donnell, of Southern Maryland, has signed onto the House measure, and his Senate counterpart, Allan Kittleman of Howard County, is supporting the Senate version.

The proposal also has united the state's agricultural interests with environmentalists. Environmental groups, including 1000 Friends of Maryland and the Maryland League of Conservation Voters, have thrown their support behind the measure.

“Keeping family farmers farming in Maryland will result in cleaner water and more locally-supported agriculture which will support our economy,” said Jen Brock-Cancellieri, deputy director of the Maryland League of Conservation Voters.

But the state's continuing budget problems have made virtually any bill with a price tag (whether it's from lost revenue or increased spending) a non-starter.

Asked whether the bill is likely to make it past his committee, Senate Budget Chairman Ulysses Currie said, "I don't think so." And both House and Senate leaders have placed an informal ban on passing any bill with any price tag this session.

Legislative analysts say the state is likely to collect $106.9 million from the estate tax in the next fiscal year and that any impact from the waiver could be sizable. But estimates are hard to come by, as it is hard to estimate when people will die.

Families have been squeezed by the tight deadline they have to come up with the cash – eight months since their parents or relatives’ passing – and have resorted to either selling off equipment and livestock, or selling the land outright, said Valerie Connelly director of government relations for the Maryland Farm Bureau which has been the chief proponent of tax relief.

“In Maryland, an acre of farmland is worth almost as much as an acre of developed land,” Connelly said.

And while residents can forgo paying the estate tax on the first $1 million worth of land, the hit is still sizable for farmers who have had land in the family for generations and have seen development sprout up around them -- as it has in portions of Montgomery County.

"They're land rich, but cash poor," said Sen. Robert Garagiola, Montgomery Country Democrat and the bill's lead sponsor in the Senate.

The problem for farmers is they continue to get hit with massive tax burdens while they are being tempted to sell their land to developers. The problem for the environment is that runoff continues to be one of the biggest sources of pollution to the Chesapeake Bay. And the problem for state leaders is they can't afford to let any money slip away, as they grapple with another budget filled with employee furloughs and layoffs in an election year.

To that end, Garagiola has proposed a phase-in of the waiver which wouldn't start until 2012 and would only allow 20 percent of the land to be put into a conservation easement to avoid the tax. The amount of land eligible to be put into an easement would then increase year by year, with the idea that full exemption from the estate tax would not hit until well after the state is out of the recession.

Another alternative environmentalists are supporting is a bill which would waive the tax for families whose land is already protected from development under conservation easements.

But the farm bureau generally opposes anything short of full estate tax relief for all of the state’s family farms, Connelly said.

Read more articles and political observations from Tom LoBianco here.
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