Krist: Program portrayal unfair and inaccurate

The complex intersection of tax policy, agricultural economics and land-use regulation deserves better than the simplistic and misleading treatment it was accorded in The Star's Dec. 18 article, "Tax breaks for farmers defended."

In an apparent attempt to manufacture controversy where none exists, the reporter omitted relevant facts, employed biased and inaccurate terms to describe key elements of the Land Conservation Act, and made illogical assumptions about the relationship between the LCA program and the land-use restrictions imposed by Save Open-space and Agricultural Resources.

It would be an understatement to call this disappointing, considering how much The Star has done in the past to improve public understanding of local agriculture.

Let us start with language. The article repeatedly refers to the tax treatment afforded agricultural landowners under the LCA program as a "subsidy" and a "tax break." As any careful writer should know, these are neither generic nor neutral terms. "Subsidy" has a very specific economic definition, and "tax break" is emotionally loaded. Both terms are inaccurate and unwarranted when used to describe the tax assessment process authorized under the LCA program.

To participate in the LCA program, landowners must sign binding contracts that commit them to farming their land for 10 or 20 years. By giving up all other potential economic uses of the property during that time, those owners effectively reduce the land's potential value to only its production capability. Any market value associated with other potential uses, such as a development, is stripped away.

In return, the county also signs a binding contract, agreeing to assess property taxes only on that production capability. Owners give up asset value, and the county gives up revenue that would have been derived from that relinquished value.

This is not a tax "break" any more than it constitutes a "break" to tax homeowners on the value of their property as residential real estate rather than as commercial or industrial real estate. Instead, it is a fair and straightforward financial arrangement that delivers appropriate value to both parties.

Nor does this differential assessment constitute a subsidy, which in economic terms is a direct or indirect payment intended to artificially boost business profitability in a way that the market does not support. The LCA program is, instead, intended to ensure that the tax assessment accurately reflects the legitimate value of restricted farmland, not some speculative and therefore fictional value. The program's purpose is to remove a distortion from the market, not to introduce one.

As for omitted facts, the article correctly cites the value of the LCA program to local property owners as approximately $6 million a year. That is the amount they would otherwise be overcharged in property taxes were the program not in place. The article fails to note, however, that only $1.5 million of that would have ended up in Ventura County's general fund, meaning the local impact is far less dramatic than the story implied.

The article also failed to note that when the state stopped reimbursing counties for some LCA program costs, the annual loss of revenue to Ventura County was only $300,000. In the context of a county budget of $1.7 billion, it is easy to see why members of the Board of Supervisors saw no reason to abandon its decades-long support for the LCA program just because the state discontinued this modest funding.

The confusion regarding the relationship between SOAR and the LCA program is perhaps the most dismaying flaw in the story. Although the article does not quote or cite anyone making this argument — which leads inescapably to the conclusion that it was only the reporter who felt compelled to make it — it is illogical to suggest that the tax treatment afforded by the LCA is no longer needed because SOAR already prevents farmers and ranchers from developing their land.

If it is true that SOAR means farmland can't be developed, then surely it is appropriate to base the property tax assessment on that fact. This is one accomplishment of the LCA program — it harmonizes tax policy with publicly popular land-use policy. The reporter apparently believes there is something unseemly about this, however, and implies that although the land cannot be developed, it should be taxed as if it could.

In a word, that's nonsense. And nonsense is a lousy premise for a front-page story.


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Comments » 6

cassandra2 writes:

Thanks for clarification. Sorry you are not still on the staff to educate folks about local ag.

Kurfco writes:

Excellent piece. Journalists all too often throw around terms like "subsidy" and "loophole" out of ignorance and being too lazy to really dig into the issues.

Farmers have already been subjected to what should have been considered a "taking" under the Constitution when the SOAR initiative was passed. Taxing land whose value has been impaired by the tyranny of the voters as though it were still marketable at its highest and best use would be a travesty of justice.

Chilibreath writes:

in response to CherokeeKid:

(This comment was removed by the site staff.)

But Cherokee, as a liberal rag the VCS is doing what it feels is correct "for the greater good," and for a liberal entity nothing else matters but continuing the message. I know it, you know it, and so do many other VC residents; that's we don't subscribe to this rag anymore. And if stated projections are correct that's why the VCS will morph into a weekly throwaway in about 5 years, in which case it will get its butt kicked by the Acorn.


I learned a lot from this "Kristmas" editorial, but I still think that the subsidies, tax breaks, or whatever you want to call them should ONLY apply to FOOD crops. The California wine industry doesn't need any help, and neither will the marijuana industry when we finally end that prohibition. I also think that these benefits should ONLY go to small farms. Big agribusiness doesn't need help either. Perhaps, these benefits should ONLY go to organic farms. Lastly, the issue of water prices must also be considered. If we are going to save farmland through social engineering (which I favor), then we should also save water in the same way. Organically grown essential food crops NOT destined for foreign markets should get ALL the benefits including cheap water. Currently, we export huge amounts of WATER through the international crop markets. As with any form of engineering, the devil is in the details.

ProudLiberal writes:

CherokeeKid: why don't you join the discussion with something relative besides your constant and very tiring name calling of opinions you disagree with? Educate us on the story with the facts as you know them, both provided by the Star and John Krist. We're waiting........


in response to CherokeeKid:

(This comment was removed by the site staff.)

If the "invisible hand" can't set water prices, someone has to. Why not people with science backgrounds (and people who know the difference between accept and except) instead of politicians? I pegged you as a free market fundamentalist, not a water welfare wino. As I have said many times before, Libertarian economics doesn't work for "the commons" (water, air, soil, etc).


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