AB574: Bill Text

LRB-1585/3

RCT&MES:kaf:jf

1997 - 1998 LEGISLATURE

1997 Assembly BILL 574

October 28, 1997 - Introduced by Representatives Otte, Hasenohrl, Zukowski, Plouff, F. Lasee, Grothman and Hahn, cosponsored by Senators Clausing and Grobschmidt. Referred to Committee on Ways and Means.

AB574,2,6 An Act to repeal 20.835 (2) (q) and 71.61 (2); to renumber 91.55 (3); to renumber and amend 91.78; to amend 20.835 (2) (dm), 71.05 (6) (a) 17., 71.07 (3m) (b) 1. a., 71.28 (2m) (b) 1. a., 71.47 (2m) (b) 1. a., 71.58 (8), 71.59 (1) (a), 71.59 (1) (d) 5. and (2) (b) and (c), 71.60 (title), (1) (intro.) and (2), 79.10 (11) (b), 91.06, 91.13 (1), 91.19 (7) and (8), 91.21 (1), 91.51, 91.55 (1) (b), 91.63, 91.73 (2), 91.75 (8) (b), 92.104 (5), 92.105 (1), 92.105 (2), 92.105 (6) and 92.14 (3) (intro.); and to create 20.835 (2) (r), 71.05 (6) (b) 25., 71.07 (3m) (b) 2. c., 71.26 (1) (g), 71.28 (2m) (b) 2. c., 71.45 (2) (a) 15., 71.47 (2m) (b) 2. c., 71.58 (1) (h), 71.59 (2) (f), 71.605, 91.19 (6n), 91.25, 91.52, 91.55 (1m) (intro.) and (a), 91.72, 91.75 (10), 91.77 (1) (e), 91.78 (2) and 92.14 (3e) of the statutes; relating to: eliminating farmland preservation agreements, modifying the requirement to repay farmland preservation credits, converting the farmland preservation credit to a straight percentage of property taxes accrued, creating guidelines for the designation of agricultural preservation areas by counties, creating guidelines for the rezoning of land in an exclusive agricultural zone to residential use, soil and water conservation standards, the requirement that an application for a farmland preservation agreement be signed by all persons holding a mortgage on the land to be covered by the agreement, release from a farmland preservation agreement of foreclosed land, granting rule-making authority and making appropriations.

Analysis by the Legislative Reference Bureau

Exclusive agricultural zoning and farmland preservation agreements

Under current law, an eligible claimant may recover a certain amount of property taxes paid through the refundable farmland preservation credit. A refundable tax credit means that, if the amount of the credit that is otherwise due an eligible claimant exceeds the claimant's tax liability, or if there is no outstanding tax liability, the excess amount of the credit is paid to the claimant by check.

One of the eligibility requirements for the farmland preservation credit under current law is that the land to which the claim relates be subject either to a farmland preservation agreement or to a county exclusive agricultural use zoning ordinance that is certified by the land and water conservation board (LWCB). Under current law, an owner may only apply for a farmland preservation agreement if the county in which the land is located has in effect an agricultural preservation plan that is certified by the LWCB or the land is subject to a certified exclusive agricultural use zoning ordinance.

This bill requires the department of agriculture, trade and consumer protection (DATCP) to establish a schedule for the recertification of county exclusive agricultural use zoning ordinances. Current certifications expire according to that schedule. Future certifications are for a period specified by the LWCB, not to exceed 10 years. The bill also provides that a county, except for Milwaukee County, must have a certified agricultural preservation plan in order to obtain recertification of its exclusive agricultural use zoning ordinance. The ordinance must be consistent with the agricultural preservation plan. The bill requires DATCP to establish guidelines, which are binding on counties, for agricultural preservation planning and for rezoning of agricultural land for residential use.

This bill phases out farmland preservation agreements by prohibiting DATCP from entering into, or extending, farmland preservation agreements for land in a county after the date for recertification of the exclusive agricultural use zoning ordinance for that county. The bill also requires DATCP to release land from a farmland preservation agreement without penalty, at the owner's request, if the recertification date for the county in which the land is located has passed or if the land is subject to a certified exclusive agricultural use zoning ordinance.

Under current law, one of the conditions for entering into a farmland preservation agreement is that the application form must be signed by all persons holding a recorded mortgage on the land to be covered by the agreement. This bill eliminates that condition. The bill also requires that DATCP release land from a farmland preservation agreement if ownership of the land changes as a result of foreclosure of a mortgage.

Under current law, in some of the circumstances under which DATCP may release land from a farmland preservation agreement, or if land is rezoned from exclusive agricultural use, DATCP is required to file a lien against the land for the amount of the farmland preservation credit received by the owner during the last 10 years. This bill reduces the amount of the lien to the amount of the farmland preservation credit received during the last 5 years.

Soil and water conservation standards and guidelines

Current law requires a county land conservation committee to establish soil and water conservation standards that apply to persons who claim a farmland preservation credit. The LWCB reviews the county soil and water conservation standards and approves or disapproves them based on guidelines that LWCB develops. If a county land conservation committee determines that farming operations are not in compliance with the soil and water conservation standards, the land owner is not eligible for the farmland preservation credit. This bill requires county soil and water conservation standards and LWCB's guidelines to allow a person who has no need to grow hay or grass crops to comply with the soil and water conservation standards by using reduced tillage practices instead of growing hay or grass crops.

Farmland tax relief credit and farmland preservation credit

The farmland tax relief credit is a refundable income and franchise tax credit that is based on property taxes accrued on farmland and gross farm profits. Under this bill, a person who claims the farmland tax relief credit may not also claim the farmland preservation tax credit if both claims relate to the same taxable year. Also under the bill, both the farmland tax relief credit and the farmland preservation tax credit are funded from the same appropriations. Currently, these credits are funded from different appropriations.

This bill also makes a number of changes in the farmland preservation credit. The bill changes the definition of "claimant" to prevent a person who is ineligible for the credit because of outstanding property taxes due on the farmland from receiving the credit after the outstanding taxes have been paid by a subsequent landowner. Current law requires recipients of the credit to be in compliance with soil and water conservation standards at the time the claim is filed. Under the bill, recipients of the credit are required to be in compliance with soil and water conservation standards at the end of the year for which the credit is claimed. The bill also exempts from income and franchise taxation amounts received under the farmland preservation credit.

For taxable years beginning after December 31, 1997, based on property taxes accrued in the previous year, the bill creates a new method of computing the farmland preservation credit for farmland that, at the close of the year to which the claim relates, is in an area zoned for exclusive agricultural use and is not subject to a farmland preservation agreement. Under the bill, a claim under the credit is calculated to be 50% of the property taxes accrued on farmland that is in an area zoned by a city, village, town or county for exclusive agricultural use at the close of the year or, if the farmland is in an area identified in a county agricultural preservation plan as a transition area, 25% of the property taxes accrued on the farmland. Under either calculation, the maximum credit is $7,500.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB574, s. 1 Section 1. 20.835 (2) (dm) of the statutes is amended to read:

AB574,4,5 20.835 (2) (dm) (title) Farmland preservation credit and farmland tax relief credit supplement. A sum sufficient to pay the aggregate claims approved under subch. IX of ch. 71 and the aggregate claims approved under ss. 71.07 (3m) (c), 71.28 (2m) (c) and 71.47 (2m) (c) that exceed the amount appropriated under par. (r).

AB574, s. 2 Section 2. 20.835 (2) (q) of the statutes is repealed.

AB574, s. 3 Section 3 . 20.835 (2) (r) of the statutes is created to read:

AB574,4,11 20.835 (2) (r) Farmland preservation credit; farmland tax relief credit. From the lottery fund, a sum sufficient, not to exceed, in a fiscal year, $16,300,000, to pay the aggregate claims approved under subch. IX of ch. 71 and the aggregate claims approved under ss. 71.07 (3m) (c), 71.28 (2m) (c) and 71.47 (2m) (c).

AB574, s. 4 Section 4 . 71.05 (6) (a) 17. of the statutes is amended to read:

AB574,4,14 71.05 (6) (a) 17. The amount received under s. 71.07 (3m) (c) or 71.60, or both, that is not included in federal adjusted gross income.

AB574, s. 5 Section 5 . 71.05 (6) (b) 25. of the statutes is created to read:

AB574,5,3 71.05 (6) (b) 25. All amounts received as a farmland preservation credit under subch. IX to the extent that the amounts are included in federal adjusted gross income.

AB574, s. 6 Section 6. 71.07 (3m) (b) 1. a. of the statutes is amended to read:

AB574,5,12 71.07 (3m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income taxes otherwise due on the claimant's income or if there are no Wisconsin income taxes due on the claimant's income, the amount of the claim not used as an offset against income taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 7 Section 7 . 71.07 (3m) (b) 2. c. of the statutes is created to read:

AB574,5,15 71.07 (3m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 8 Section 8 . 71.26 (1) (g) of the statutes is created to read:

AB574,5,19 71.26 (1) (g) Farmland preservation credit. Any amount received as a farmland preservation credit under subch. IX to the extent that such an amount is included in federal taxable income.

AB574, s. 9 Section 9. 71.28 (2m) (b) 1. a. of the statutes is amended to read:

AB574,6,4 71.28 (2m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 10 Section 10 . 71.28 (2m) (b) 2. c. of the statutes is created to read:

AB574,6,7 71.28 (2m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 11 Section 11. 71.45 (2) (a) 15. of the statutes is created to read:

AB574,6,11 71.45 (2) (a) 15. By subtracting from federal taxable income all amounts received as a farmland preservation credit under subch. IX to the extent that the amounts are included in federal taxable income.

AB574, s. 12 Section 12. 71.47 (2m) (b) 1. a. of the statutes is amended to read:

AB574,6,21 71.47 (2m) (b) 1. a. Subject to the limitations provided in this subsection and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under par. (c). If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft paid from the appropriation under s. 20.835 (2) (q) (dm) or (r) or both.

AB574, s. 13 Section 13 . 71.47 (2m) (b) 2. c. of the statutes is created to read:

AB574,6,24 71.47 (2m) (b) 2. c. If the claimant files a claim for the credit under subch. IX for the same taxable year for which the claimant files a claim under this subsection.

AB574, s. 14 Section 14. 71.58 (1) (h) of the statutes is created to read:

AB574,7,3 71.58 (1) (h) For purposes of filing a claim under this subchapter, "claimant" does not include a person who has transferred farmland to a new owner and who was not able to provide the certification under s. 71.59 (1) (b) 2. at the time of the transfer.

AB574, s. 15 Section 15. 71.58 (8) of the statutes is amended to read:

AB574,8,3 71.58 (8) "Property taxes accrued" means property taxes, exclusive of special assessments, delinquent interest and charges for service, levied on the farmland and improvements owned by the claimant or any member of the claimant's household in any calendar year under ch. 70, less the tax credit, if any, afforded in respect of the property by s. 79.10. "Property taxes accrued" shall not exceed $6,000 for claims filed under s. 71.60. If farmland is owned by a tax-option corporation, a limited liability company or by 2 or more persons or entities as joint tenants, tenants in common or partners or is marital property or survivorship marital property and one or more such persons, entities or owners is not a member of the claimant's household, "property taxes accrued" is that part of property taxes levied on the farmland, reduced by the tax credit under s. 79.10, that reflects the ownership percentage of the claimant and the claimant's household. For purposes of this subsection, property taxes are "levied" when the tax roll is delivered to the local treasurer for collection. If farmland is sold during the calendar year of the levy the "property taxes accrued" for the seller is the amount of the tax levy, reduced by the tax credit under s. 79.10, prorated to each in the closing agreement pertaining to the sale of the farmland, except that if the seller does not reimburse the buyer for any part of those property taxes there are no "property taxes accrued" for the seller, and the "property taxes accrued" for the buyer is the property taxes levied on the farmland, reduced by the tax credit under s. 79.10, minus, if the seller reimburses the buyer for part of the property taxes, the amount prorated to the seller in the closing agreement. With the claim for credit under this subchapter, the seller shall submit a copy of the closing agreement and the buyer shall submit a copy of the closing agreement and a copy of the property tax bill.

AB574, s. 16 Section 16. 71.59 (1) (a) of the statutes is amended to read:

AB574,8,13 71.59 (1) (a) Subject to the limitations provided in this subchapter and s. 71.80 (3) and (3m), a claimant may claim as a credit against Wisconsin income or franchise taxes otherwise due, the amount derived under s. 71.60 or 71.605. If the allowable amount of claim exceeds the income or franchise taxes otherwise due on or measured by the claimant's income or if there are no Wisconsin income or franchise taxes due on or measured by the claimant's income, the amount of the claim not used as an offset against income or franchise taxes shall be certified to the department of administration for payment to the claimant by check, share draft or other draft drawn on the general fund.

AB574, s. 17 Section 17 . 71.59 (1) (d) 5. and (2) (b) and (c) of the statutes are amended to read:

AB574,8,22 71.59 (1) (d) 5. That soil and water conservation standards applicable to the land are established and approved as required under s. 92.105 (1) to (3) and that no notice of noncompliance is in effect under s. 92.105 (5) with respect to the claimant at the time the certificate is issued end of the taxable year for which the claim is made. A zoning authority shall not issue a zoning certificate for property for any year at the end of which a notice of noncompliance under s. 92.104 (4) or 92.105 (5) is in effect for the property.

AB574,8,25 (2) (b) If a notice of noncompliance with an applicable soil and water conservation plan under s. 92.104 is in effect with respect to the claimant at the time the claim is filed end of the taxable year for which the claim is made.

AB574,9,3 (c) If a notice of noncompliance with applicable soil and water conservation standards under s. 92.105 is in effect with respect to the claimant at the time the claim is filed end of the taxable year for which the claim is made.

AB574, s. 18 Section 18. 71.59 (2) (f) of the statutes is created to read:

AB574,9,7 71.59 (2) (f) If the claimant files a claim for the credit under s. 71.07 (3m), 71.28 (2m) or 71.47 (2m) for the same taxable year for which the claimant files a claim under this subchapter.

AB574, s. 19 Section 19 . 71.60 (title), (1) (intro.) and (2) of the statutes are amended to read:

AB574,9,13 71.60 (title) Computation; farmland preservation agreements. (1) (intro.) Except as provided in sub. (2), for farmland that is subject to a farmland preservation agreement under subch. II of ch. 91 at the close of the year to which the claim relates, the amount of any claim filed in calendar years based upon property taxes accrued in the preceding calendar year shall be determined as follows:

AB574,9,17 (2) If the farmland is subject to a certified ordinance under subch. V of ch. 91, or an agreement under subch. II of ch. 91, in effect at the close of the year for to which the credit is claimed claim relates, the amount of the claim is 10% of the property taxes accrued or the amount determined under sub. (1), whichever is greater.