The issue of property taxes, while not fun, is vital for many farmers. Small farmers who have been denied agricultural valuation of their land face thousands of extra dollars in extra taxes — a cost that they cannot readily absorb with their narrow profit margins.
While in special session, the Texas Legislature is considering multiple bills relating to property taxes – including HB 92 by Representative Eddie Rodriguez, which would help small farmers across the state. This was a bill we worked on and hoped to pass during the regular session, but was one of the thousands of bills that never made it to committee. This time, it was approved by the House Ag Committee on Friday and has a chance to move forward!
Under Texas law, land that is primarily used for agriculture is supposed to qualify for lower taxes, known as “agricultural valuation.” “Agricultural use” is defined broadly, yet many local county appraisal districts have applied it in an unfair and restrictive manner. Multiple counties have imposed higher taxes on many people whose primary use of their land includes:
- vegetable farms,
- urban farms, and
- diversified livestock farms.
HB 92 seeks to clarify the statute so that these farms qualify for the agricultural valuation that they are entitled to.
Please call your State Representative today and urge him or her to vote YES on HB 92, to provide for fair property taxes for small farmers. You can find out who represents you at www.fyi.legis.state.tx.us or by calling the Texas Capitol Switchboard at 512-463-4630.
Sample message for calls or email:
“My name is ___, and I am a constituent. I urge you to co-sponsor HB 92, the property tax bill that would provide small and sustainable farmers with the same tax treatment as large farmers. Please show your support for small businesses and local food production by co-sponsoring HB 92 and helping to move it forward as quickly as possible.”
If you use email, be sure to have a very clear subject line (such as “Vote YES on HB 92”). Also, your email will have a greater impact if you personalize it with a sentence or two about why this issue is important to you.
Although Texas law provides for “agricultural valuation” of land used primarily for raising food, small farmers across the state have experienced problems in qualifying for such valuation due to the misapplication of the law by county appraisers.
HB 92, the Fair Taxes for Small Farmers bill, provides for fair, consistent application of agricultural valuation. In the 2015 session, a very similar bill (HB 1900) was passed by the House by a vote of 135-4.
The Tax Code provides that land shall be appraised as qualified agricultural land if it is “devoted principally to agricultural use to the degree of intensity generally accepted in the area.” Unfortunately, many county appraisal districts have applied the provision so as to exclude legitimate farms.
HB 92 clarifies the Tax Code by:
- Specifying that fruit and vegetable production qualify as “agricultural uses.” There have been multiple cases of county tax assessors asserting that growing vegetables isn’t agriculture, or applying guidelines developed for row crops instead of vegetable production so as to exclude them.
- Directing the Comptroller to convene stakeholder groups to develop guidelines to address under what conditions small acreages, different types of production methods, and diversified farms qualify for agricultural valuation.
To help limit who is eligible and prevent abuses, the bill includes specific factors to be considered for small acreages, including:
- the financial investment of the producer in agricultural use of the land,
- the degree of active management for agricultural use, and
- the percentage of the land being used for agricultural purposes.
The landowner must still show that the land is devoted principally to agricultural use, and has been for at least five of the preceding seven years. The landowner will also remain subject to five years of rollback taxes if the property ceases to be used for agricultural purposes.
This proposal does not seek to increase the number of landowners who are entitled to open-space valuation; rather, it merely ensures that people who should already qualify for agricultural valuation under the Texas Constitution are not inappropriately excluded by local authorities.
HB 92 is supported by the Farm and Ranch Freedom Alliance, Texas Organic Farmers and Gardeners Association, the Farm & Food Coalition of East Texas, the Food Policy Council of San Antonio, GROW North Texas, the Texas Local Food and Farm Coalition, and the Waller County Farmers and Ranchers Cooperative.