Policy Season is Here

Each year, Wisconsin Farm Bureau members engage in discussions surrounding agricultural policy.

The WFBF governmental relations team assembles issue backgrounders each year to assist county Farm Bureau members in starting conversations at local policy development meetings. As members gather for policy discussions, these four topics are ones for consideration. Members are encouraged to review these topics prior to attending their policy development meeting.

Full issue backgrounders with discussion questions are available on these topics by visiting wfbf.com/policy/policydevelopment/policy-development-issue-backgrounders.

Managed Forest Law Program

The Managed Forest Law (MFL) program is a landowner incentive program that encourages sustainable forestry on private woodland. In exchange for following sound forest management, the landowner pays reduced property taxes. It was enacted in 1985 and replaced the Woodland Tax Law and the Forest Crop Law.

To participate in the MFL program, landowners designate property as ‘open’ or ‘closed’ to public access for recreation and commit to a 25 or 50-year sustainable forest management plan. The plan sets the schedule for specific forestry practices which landowners must complete. In return, MFL participants make a payment in lieu of regular property taxes.

Open designation allows public access to the property only for hunting, fishing, hiking, sight-seeing and cross-country skiing without additional permission from landowners. MFL land designated as ‘open” must be accessible to the public on foot by public road or from other land open to public access. All land enrolled in the MFL program must meet the access requirements for land designated as “open”, regardless of enrollment date. ‘Closed’ designation affords landowners the right to restrict access.

MFL lands receive modified tax status to sustainably grow timber for wood products. To qualify and comply with the law, the lands are restricted from other industry or land use. Prohibited usage includes, but is not limited to, agriculture, grazing, commercial storage facilities, game farms, cell towers, mines, quarries, orchards and recreational developments such as golf courses, campgrounds or raceways.

To help landowners get the most from their land, MFL plans contain recommendations related to forestry, wildlife, watershed, endangered resources and aesthetics. The plan describes the property and spells out any mandatory forest management practices required during the MFL entry period. Landowners and their local Tax Law Forestry Specialist may adjust management plans as stand conditions, knowledge on woodland management and landowner objectives change. Mandatory practices are forest management practices that must be carried out during the MFL entry period.

DISCUSSION QUESTIONS: Currently municipalities retain 80% of the reduced property taxes collected on land enrolled in the MFL program. Should that percentage be increased? Under the MFL program, at least 80% of the acres must be covered by forest dedicated to growing commercial timber products. Should that percentage be increased? The program allows up 320 acres to be closed in a municipality; should that number be increased to allow for the municipality to collect the higher access fee? Should the Wisconsin Department of Natural Resources do more to enforce the current MFL requirements?

PROPERTY TAXES AND USE-VALUE

Property tax is the largest source of local tax revenue in Wisconsin. Prior to 1900, the property tax was the state government's largest tax. As the state's economy has diversified, state government has come to rely on other tax sources and has established various aid programs to reduce local reliance on the property tax.

The 1995 Act 27 provided for use-value assessment of agricultural land. Act 27 directed the Wisconsin Department of Revenue (DOR) to develop property tax formulas taxing this land at the value of its use, or the income it could generate if farmed, instead of its market value. Use-value is specific to land only and requires that the assessed value of farmland is based on the income that could be generated from its rental for agricultural use.

Income and rental from farming are a function of agricultural capability. Since any land can theoretically be used for agricultural purposes, state laws and administrative rules limit the benefit of use-value assessment to land that is devoted primarily to a qualifying agricultural use.

The Farmland Advisory Council oversees agriculture usevalue. The Wisconsin Department of Revenue (DOR) Secretary chairs the ten-member council. These members represent agricultural, financial, academic, assessment, environmental and governmental interests.

The law was intended to keep land in production agriculture rather than be developed. In the mid-90s, high property values, leading to high property taxes, existed relative to low farm income. This scenario was forcing many farmers to sell land to developers, especially in growing suburban areas surrounding cities. Across Wisconsin, the effective annual property tax rate stands at 1.53%, the eighth highest among states. For context, homeowners in the U.S. pay an average of 1.03% of their housing value in property taxes a year.

DISCUSSION QUESTIONS: Does WFBF current policy cover possible changes or updates proposed by the Wisconsin state legislature? Are the current WFBF state policies still relevant to Wisconsin law? In what ways could use-value be updated in Wisconsin state law? Should there be changes to the Farmland Advisory Council? Agriculturally productive land continues to be converted away from farmland; is use-value achieving its goal of keeping land in production agriculture or should a new method by adopted? Does use-value put an undue burden on rural units of government because of the lack of property taxes collected? Should the legislature invest more in the shared revenue formula to compensate rural local governments for use-value?

Solar Siting And Adverse Agricultural Impacts In Wisconsin

In Wisconsin, the Public Service Commission (PSC) regulates the construction of solar energy generation facilities. Under Wisconsin state law, no person may construct an electric generation facility without first obtaining approval from PSC. For the large projects (greater than 100 megawatts), a public utility must obtain a Certificate of Public Convenience and Necessity (CPCN) (s. 196.491). For smaller projects, a public utility must obtain a Certificate of Authority (CA) (s. 196.49).

The application requires a description of potential impacts to current agricultural practices in the project area, describe impacts to farming operations, certain agricultural systems, farmland loss, agricultural facilities, and any agricultural incentive program participation within the project area. Furthermore, the application requires a description of the process for potentially restoring land to agricultural use after decommissioning and any induced voltage issues.

While all large solar energy generation facilities being required to obtain a CPCN prior to construction, wholesale merchants are exempt from certain review requirements. A wholesale merchant does not consider alternative sources of supply, economic and engineering factors, project’s cost to ratepayers, or the facility’s necessity to the public’s energy needs, but they are not exempt from potential agricultural impact descriptions required in the application.

Although, due to the nature of the lease contracts and statutory conditions under current Wisconsin State Law (s. 32.035), the review requirements for a CPCN, for both public utilities and wholesale merchants, do not require the submission of a full Agricultural Impact Statement. If a solar energy generation facility were to exercise eminent domain or a project impacted 5 or more acres of land taken from a farm, then the Department of Agriculture, Trade and Consumer Protection (DATCP) would be required to prepare a full Agricultural Impact Statement (AIS) as a condition of the application. Conducting an AIS would provide a greater level of analysis on the impact to agriculture than the current application requirements, as well as provide recommendations from DATCP experts to the PSC and applicants to mitigate agricultural impacts of the project.

Over the past few years, Wisconsin has experienced a significant rise in the establishment of large scale solar energy generation facilities. These advancements have sparked various public reactions. While some applaud the transition to renewable energy sources, others express concerns regarding the impact and oversight in siting of these facilities on agricultural land.

DISCUSSION QUESTIONS: Are the current processes for review and approval of solar energy generation facilities meeting the needs of the agricultural community? Should Wisconsin State Law require an Agricultural Impact Statement (AIS) in order to obtain a CPCN to construct a solar energy generation facility? Are the contents currently required for an AIS sufficient to consider the true impact that a solar energy generation facility could have on the agricultural community? Should the requirement to prepare an AIS be extended to be required for any energy generation project impacting a farming operation that needs a CPCN? Should siting of solar energy generation facilities be required to avoid high-quality farmland and soil-types, to the extent practicable? Should a public utility be required to address the review requirements the wholesale purchaser was exempted from when purchasing or acquiring a solar energy generation facility?