Agricultural land, drought and taxes

The New Mexico legislature is considering a bill this year that would make it easier for farmers to maintain their “agricultural” designation, for property tax purposes, during drought. This is important for preservation of rural agricultural ways of life, because ag land taxes are cheaper than land otherwise labeled (“residential”, for example). For this reason, the New Mexico Acequia Association supports it:

In acequia communities this is vitally important to keep lands in agricultural production and to protect continuity in agricultural use. It protects landowners and families with long-time ties and long-term commitment to agricultural use of the land.

But there are competing/conflicting policy issues.

In the greater Albuquerque metropolitan area, the ag property tax designation incentivizes keeping irrigation going that is clearly non-economic for agricultural purposes alone. (In the most recent census of agriculture, net farm income in the county in which Albuquerque sits was negative.) This suggests that, here, people are farming as a lifestyle amenity, with a day job that pays the bills and a tax break that subsidizes the enterprise.

This may very well be a desirable policy outcome. The community as a whole may sufficiently value that green space to support such a subsidy and to prefer the resulting incentive to divert water to that use. But the discussion should be explicit about that tradeoff.

The legislation: HB 112

update: a couple of helpful comments from Coco over on the Twitters (I wish there was some way to automate this, a lot of the most interesting discussion these days happens over there)

 

 

4 Comments

  1. About 10 years ago, the UNM Institute for Pulbic Policy did a statistically valid survey of voters in the middle Rio Grande region. Overwhelmingly, voters support making water available for agriculture because they understand the value of what we now call “ecosystem services” that irrigated agriculture provides. Economics are not, and cannot be, the only determinant of public policy.

  2. Regardless of what the census of agriculture says, it is extremely doubtful that “net farm income in the county in which Albuquerque sits was negative.” This reflects only the extremely favorable income tax treatment afforded agriculture. In reality, many people engaged in agriculture can make a profit but are treated otherwise for purposes of income taxes. (USDA reports make this point.) The special property tax treatment is just one more kind of tax break piling onto the stack, not a deserved compensation for the assumed philanthropic behavior of agricultural businesses.

  3. Robert – Thanks, what I’m looking for is something that would make it easy to auto-embed tweets responding to a specific post in that post. Anything like that?

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