Tax task force: No special breaks for organic

A task force focused on updating county property tax policies is taking a dim view of special tax breaks for organic farms.

The county Real Property Tax Stakeholders Task Force said Monday that organic produce falls into one of four current categories qualifying for lower land evaluation and there’s no need to create another just for organic farms.

The task force was discussing a bill introduced by Puna makai Councilman Greggor Ilagan, who introduced the bill in February shortly after voting against restrictions on genetically modified crops. Ilagan said he believes the farms should get a break to offset the cost of getting certified and because the work tends to be more labor intensive than conventional farming.

But the task force, co-chaired by Hilo Councilman Dennis “Fresh” Onishi and Kohala Councilwoman Margaret Wille, said organic produce is different from farm products that have undergone studies and have rating agencies that determine their value.

“The valuations are based on specific crop value studies, and in this case, there was no study,” Wille said.

Wes Takai, a 39-year Real Property Division employee who retired in 2007, urged the task force not to delve into the issue of organic farming.

“Because of the recent GMO issues and because organic farming somewhat ties into the GMO issues, I suggest that this agenda item be deleted and not be an item brought before this committee,” Takai said. “I think your plate is full enough.”

The task force will finalize its negative recommendation at a meeting Thursday. It will then send the recommendation back to the County Council Finance Committee, which had sent it to the task force by an 8-1 vote, with Ilagan dissenting.

Ilagan has said the bill would create very little extra work for the Real Property Tax Division, because farms are currently certified as organic by a different agency. The burden of proof would be on the farmer, he said.

Task Force member Bob Price disagreed.

“I worked for the division,” Price said. “I have a pretty good idea what kind of burden it places on the department.”

The move would benefit 56 certified organic farms on the Big Island, totaling 846 acres, Ilagan estimated. Another 1,200 acres of organic ranch land is already at the lower rate, which applies to low-intensity agriculture, he said.

Bill 185 would lower the tax assessment for the farms from as much as $4,000 per acre to $420 per acre for nondedicated agriculture land. With a tax rate of 9.25 percent, the change could mean a reduction in taxes by as much as $33 per acre.

“It’s very labor intensive. The certification costs can range from hundreds to thousands of dollars,” Ilagan told Stephens Media earlier this year.

The bill would not have a significant impact on county tax revenues, Ilagan said, estimating that the difference would be about $29,000.

The county’s current categories are intensive agriculture, orchards, feed crops and fast rotation forestry and pasture and slow rotation forestry. Land values are set for each category based on formulas for the value of the crops. The lower values can knock thousands off taxes on parcels of land, compared to the taxes property owners would pay at market rate.

“While there was recognition that certified organic farming may carry with it added production costs, concern was expressed that the valuation, as proposed, would not be based on any particular crop value,” said the draft recommendation to the council. “It appears the classification would be established more to support a specialty farming technique overlaying the existing classifications.”