Some farm aid likely to go through in Wisconsin, even if they have some flaws

I wanted to give a run down of the farm bills that passed the Joint Finance Committee this week are will likely get votes in the State Legislature before it goes on its 10 1/2 month paid vacation.

The biggest-ticket item was thrown in by Republicans that increases the write-off for farm buildings, which unanimously passed the JFC on Tuesday and is slated to go to the full Assembly as part of their session-ending extravaganza on Thursday.
But when the Legislative Fiscal Bureau dug into the bill, it noted that it may be difficult to separate a "farm building" from the homes and other structures on the property.

Further, when residential property is valued as part of farm set, its value would not be delineated from the other farm buildings as part of the improvements listed on the tax bill and reported to DOR. However, using information filed on the state income tax form used for the calculation of a taxpayer's property tax/rent credit, DOR estimates that approximately 70.2% of value included in the agriculture-other property classification is associated with farm residences. Based on this percentage, and accounting for the income limitation and maximum credit, DOR estimates that the refundable farm buildings credit would increase GPR expenditures to pay credit claims by $27.3 million in 2020-21, 2021-22, and 2022-23. The credit would sunset after tax year 2022, and minimal GPR expenditures are estimated beginning in 2023-24.

DOR also notes that, to the extent some farm residences are actually classified as residential rather than agriculture-other, the cost would be higher. That is, farm residences would make up less of the agriculture-other classification, which would increase the value of farm buildings used in the calculation of the credit. DOR further indicates that to the extent that some of the agriculture-other improvements do not satisfy the exclusive farm use requirement, the fiscal effect could be smaller. It is possible that, in response to the availability of the credit, claimants may change title to jointly own buildings and improvements assessed as agriculture-other under state property tax law. Thus, the fiscal effect may increase to the extent multiple claimants can separately claim credits of up to $7,500 on the same property.

Further, the LFB says there is a scenario where the largest benefit of this bill would go to CAFOs and other mega-farms, although the bill's maximum tax break of $7,500 keeps the benefits from being slanted too far to the large farms.

In order to qualify for the maximum credit of $7,500, a claimant would have to own agriculture-other improvements, excluding the value of residential property, valued at $631,900. DOR notes that most farms would likely receive a credit below the $7,500 maximum credit limit. Rather, DOR indicates that large dairy farms or confined animal farming operations (CAFOs) permitted by the Department of Natural Resources (DNR) will be impacted by the limit. DOR indicates that a sample of large dairy CAFOs would receive a median farm buildings credit of $19,400, before the $7,500 credit limitation is applied. For such CAFOs, the limitation would lower their credit by about $11,900 on average.

It feels like that could be improved, and/or there might be better ways to lower property taxes in rural areas, like through Governor Evers' proposal to increase sparsity aid and providing property tax relief for school funding. But I'd imagine this goes through as part of a group of bills designed to at least give the appearance of helping our state's struggling farmers.

Another bill is designed to help on the knowledge side of the agricultural economy, in the form of an additional $1 million a year for ag research at UW-Extension.

The bill would provide $1,000,000 GPR annually beginning in 2019-20 in the UW System's general program operations appropriation and require the Board of Regents to allocate $1,000,000 in each year from that appropriation to provide additional funding for state specialists providing extension services at the UW-Madison College of Agricultural and Life Sciences in the field of applied agricultural research. The bill would specify that this amount be in addition to any other amount allocated to UW-Madison by the Board of Regents, and that it be a bona fide increase of funding above the level that would otherwise be provided in the absence of this provision.

Seems odd that they would offload these duties to UW-Madison when they could have done this in-house at the Department of Agriculture, Trade and Consumer Protection (DATCP). But then you realize that this allows the WisGOPs to get more say over what UW-Madison does, and takes that program away from the Evers Administration, and it makes a bit more sense.

Here are some of the other bills passed through JFC as part of the farm package, even if some of the items won't necessarily go to farmers.

AB 742/SB 665, which would increase by $239,800 annually the funding provided by the Department of Health Services to help pay for training of emergency medical technicians.

Not a bad idea here, as it gives help to local services that are often short on funding availability in the Age of Fitzwalkerstan.

Another item in that group of "farm bills" took a proposal from Governor Evers' special session, and then made a minor modification.

*SSAB 7, which would give small dairy processing plants preference when DATCP awards grants. The committee amended the bill to define small processors.

The bill adds another $600,000 a year for those grants, but the definition of "small processors" is one that makes "no more than 50,000,000 pounds of processed product per year". I don't know whether 50 million pounds is a lot or not, but it seemed OK for the JFC, as all 14 members present on Tuesday gave it the OK.

Another bill that got through JFC started from that special session, as part of an Evers proposal to set aside money to try to expand markets for state farmers. But it's now quite a bit bigger.

SSAB 6, one of Evers’ special session bills. Evers wanted to provide DATCP $1 million as part of an effort to increase dairy exports to 20 percent of the nation’s milk supply by 2024 and authorize two positions at the agency. The committee signed off on an Assembly amendment to expand the bill by requiring WEDC and DATCP to work on increasing the state’s dairy exports to 20 percent of the nation’s milk supply by 2026, along with increasing meat and crop exports. The amended version also would require WEDC and DATCP to propose in their 2021-23 budget requests how to achieve the objectives with proposals of up to $5 million.

I can go overseas, too!

It's a nice goal, but do we really need to be trying to pump out more and more milk and other products? Isn't that part of the problem? And while I don't mind the idea of government having more input on the direction of our agricultural economy, relying on marketing and exports seems risky and could end up having us get stuck in future years if the markets and/or prices don't make it economically sensible to be pushing exports like this.

I also note that the GOP Amendment that passed JFC (with zero votes from Dems on the Committee) moved the location of the new Wisconsin Initiative for Dairy Exports from DATCP to WEDC, but then makes DATCP use a couple of staffers to help WEDC. It's a subtle change, but quite telling that GOPs would rather the effort be overseen by the still-GOP controlled WEDC Board than the Evers Administration.

In general, these have been a rare example of bipartisan solutions that are likely to be signed by the Governor, even if they have some flaws. And they're a lot better than a lot of the garbage that'll get shoved through in tomorrow's "hurry up and go on our paid vacay" Assembly session.