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Fund to protect farmland, open spaces facing end

Joost J. Bakker/FlickrGov. Brown has proposed ending state support for the Williamson Act, which protects farmland.

Gov. Jerry Brown's plan to end state funding for a program designed to protect farmland and open spaces has reignited a decades-old controversy over the law's effectiveness.

The recommendation to cut $10 million from the program has led to an outcry from the state's agricultural and environmentalist communities. Jenesse Miller, communications director for the California League of Conservation Voters called the Williamson Act an "exceptional program" and said removing state funding for it would be a "major and painful loss."

"The act is a big part of protecting open space in California," said Miller. "We understand that the governor and his staff are in a tough place, but we're very concerned that just zeroing out the funding could open up these areas to massive urban sprawl."

Adopted in the midst of the post-World War II population boom, the California Land Conservation Act of 1965, commonly known as the Williamson Act after its legislative sponsor, permits counties to enter into contracts with private property owners to preserve land for agriculture or open space.

The Department of Conservation's Division of Land and Resource Protection, which administers the program, estimates that 16 million acres, or about half of the state's farm and ranch land, are under a Williamson Act contract.

Since 1972, the state has provided money to counties that sign Williamson Act contracts with landowners, who in exchange for agreeing to not develop their land – usually for a 10-year period with another year added annually – receive a 20 to 75 percent break on their property taxes. The state funds, known as subvention payments, help offset the county's lost property tax revenue. The contracts remain in place unless landowners or counties opt out of them.

Until the 2008-09 budget year, the state appropriated an average of $35 million to $40 million for subventions, according to the Legislative Analyst's Office. After a one-year suspension of payments during the budget crisis, the legislature offered $10 million for subventions from the 2010-11 General Fund.

Under Brown's proposed budget, the $10 million would be cut, and the state would cease to fund the Williamson Act in an effort to address California's $25 billion budget gap.

Paul Wenger, president of the California Farm Bureau Federation and an almond and walnut farmer in Modesto, said defunding the Williamson Act would encourage counties to tax farmers at residential rates. 

"If you are a taxi driver, you should be taxed as a taxi driver and not based on what your salary was if you had chosen to be a doctor," said Wenger. "It doesn't make sense to penalize growers for not developing their land."

But in its overview of the governor's budget, the Legislative Analyst's Office agreed with Brown's proposal, saying that it had previously questioned the cost-effectiveness of the program. The report specifically referred to this analysis [PDF] outlined in its 2004 General Government Analysis, highlighting "substantial weaknesses" in the program:

The state exercises no control over the specific land parcels that are put under contract, and as such, cannot ensure that participating lands are in fact at risk in terms of development pressures. ... If such development pressures should occur, this results in creating incentives for the landowner to cancel or not renew the contract. ... In addition, the state bears added costs for educational funding since reductions in assessed value also reduce the amount of property taxes flowing to schools.

The report estimates that with a $39.8 million subvention allocation, the program would cost the state more than $80 million when the full weight of the lost property tax revenue was taken into consideration.

H.D. Palmer, spokesman for the state's Department of Finance, said that cutting those costs were necessary in the current budget climate. He added that under the governor's realignment program, counties could use their funds to create Williamson Act-like property tax benefits for landowners.

"These decisions should be made at the local level," he said. "If it's deemed to be a local priority, the counties can make it happen."

Local priorities

It is unclear whether or not California's 58 counties would adopt such measures if the realignment plan were put into place. When the 54 counties participating in the Williamson Act were asked to vote on the $10 million subvention plan last year, which required that contract lengths be reduced from 10 years to nine years and that landowner tax benefits be reduced by 10 percent, six counties adopted the new plan, according to a California State Association of Counties survey.

Twenty-three counties voted down the plan and will continue assessing Williamson Act parcels at the same rate without the subventions, although some counties will not accept new contracts. Only Imperial County has so far chosen to end the tax breaks completely. The survey does not contain decision information on the remaining 24 counties, several of which have not yet voted on the measure.

"Agriculture and open space are important assets," wrote Santa Clara County supervisor Mike Wasserman in an email. "The Williamson Act has been instrumental in helping property owners maintain them as such."

But in some cases, local support for subventions is not just about preserving undeveloped land, but also about funding the municipalities' other programs. In some rural counties, Williamson Act money represents a large portion of the county's general fund. With few residences or businesses from which to extract property taxes, the county depends heavily on the state payments for the area's agricultural land and open space.

The program can also be ripe for abuse. A 2002 Department of Conservation audit of Santa Clara County found that some landowners were receiving property tax breaks for maintaining a small vegetable garden. Since then, the county has created stricter guidelines for its implementation of the Williamson Act.

Wenger, whose family has farmed the same property for over a century, said that the importance of preserving the land far outweighs the financial considerations of funding the program. He said he worries that he won't be able to pass down his land to his children if he is forced to pay a capital gains tax based on a significantly higher property value.

 

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