Copyright 1999 Federal News Service, Inc.
Federal News Service
SEPTEMBER 30, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
1153 words
HEADLINE: PREPARED TESTIMONY OF
CONGRESSMAN JOSEPH R. PITTS
(PA-16)
BEFORE THE
HOUSE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON OVERSIGHT
SUBJECT - THE IMPACT OF FEDERAL TAX LAWS ON
ENVIRONMENTAL CONSERVATION
AND PRESERVATION
BODY:
Mr. Chairman and
members of the Subcommittee on Oversight, thank you for allowing me to speak
before you on this very important issue. As we all know, increased development
pressures have had a drastic effect on farmland throughout the United States,
especially in the Northeast Corridor.
We have seen a sharp drop in our
country's farm acreage. In my state of Pennsylvania alone, farm acreage has
dropped from nine million acres in 1980 to eight million in 1990. And the
numbers continue to decline. Since 1950, the Commonwealth of Pennsylvania has
paved over a land mass equal in size to the entire state of Connecticut. Today,
my Congressional District, made up of Lancaster and Chester Counties, loses
around 2,000 acres of farmland each year to development. That figure could rise
rapidly in coming years if the land owned by retirement-aged farmers does not
remain in fanning.
Recently, one of my local extension agents asked, could
Lancaster County, the home of the Amish, become the next Los Angeles? With the
aging trend coinciding with years of depressed milk prices and escalating land
values, he believes this is a possibility. He informed me of the strong
agricultural heritage Los Angeles had before development. In 1944, Los Angeles
County ranked # 1 in the nation in total agricultural production at $129.4
million; Lancaster ranked 15th at $47 million. In 1992, Los Angeles County
ranked only 92nd nationally in agricultural production; Lancaster County ranked
13th.
To combat this threat to Pennsylvania's economy and quality of life,
the Pennsylvania Agricultural Conservation Easement Program was developed. This
program enables state and county governments to purchase easements (sometimes
called development rights) from owners of prime farmland. It was passed into law
in 1988, and as of August 30, 1999, 1140 farms in the Commonwealth of
Pennsylvania have been preserved. That's 142,000 acres. (Roughly $277 million of
state and local funds have been spent to purchase those easements.) Implementing
such farmland preservation programs is not only popular in Pennsylvania -- a
number of states are enrolling farms in similar programs.
Please allow me to
explain these programs for the record. Farmland preservation programs are
voluntary, programs, in which a farm owner foregoes his rights to sell the
farmland for development purposes and enters into a legally binding covenant. In
this covenant, the owner agrees to keep the land under cultivation for the life
of the farm. In return, the owner receives a one-time payment from the state or
local government. Often the payment is the difference between the agricultural
value and development value of the land. The land can never be used for
non-agricultural purposes, such as housing developments. These restrictions
affect all future owners of that land and can never be reversed. It is important
to note that farmers who sell their development rights still own and control
every other aspect of their land.
Mr. Chairman, I believe that the Federal
government needs to do its fair share to preserve our precious farmland. That is
why I introduced the Open Space Preservation Act, legislation that was
originally introduced by my predecessor Congressman Bob Walker. The Open Space
Preservation Act is very simple: it repeals estate and capital
gains taxes on all farms that are preserved in farmland
preservation programs. Rather than creating more federal programs and mandates
for land use, I believe that tax relief is a more effective and less intrusive
way to protect the environment and curb urban sprawl.
Because of the burden
of estate and capital gains taxes, farmers are often forced to sell their farms
to developers. The punitive estate tax has forced the sale of thousands of
family-owned farms in recent decades. I strongly believe that families should
not be forced to visit the undertaker and the tax man in the same week. By
enacting the Open Space Preservation Act, and repealing the estate tax on all
farms that are preserved, younger generations are going to be able to stay in
farming, rather than hand over 55 percent of the legacy a loved one intended for
his family.
By repealing capital gains taxes on preserved farms, our farmers
would be able to save for their retirement, their children's education, or a
better quality of life. This would be extremely helpful for owners of preserved
farms. If the Open Space Preservation Act were enacted, a farmer could finally
sell his farm to another farmer without paying the exorbitant capital gains tax.
Mr. Chairman, I can assure you from my experience in the Pennsylvania State
Legislature that farmers greatly appreciate the opportunities that our
Commonwealth's farmland preservation programs have provided. As a whole, farmers
are proud of their profession. They like farming, and want to continue to farm
for as long as they can. At the same time, they realize that agriculture is a
tough profession in which to be economically successful. Many farmers look upon
their farm as their means for retirement security.
Preservation programs
nationwide have allowed farmers to receive reasonable compensation for their
land, while allowing them to continue in agriculture. The proceeds from their
easement sales may be used to purchase additional farmland or farm equipment, or
may just be used to provide a retirement nest egg. In any event, farmland
preservation has provided farmers a greater opportunity to be financially secure
and continue their profession.
Although the compensation provided from
agriculture conservation easement sales is welcomed, it is not the only reason
farmers participate in the program. If money were the only motivator, farmers
would sell their properties outright to a developer, and receive a much higher
price than the preservation program. Why would farmers settle for less than full
price for their farms? I believe the answer is simple. While fanning is a
business, farmers do not make decisions on their farm operations strictly on the
basis of dollars and cents. Farmers see a real value in the preservation of
their farm and fanning business for future generations. Farmers want their
children to continue the family farm - if not their children, then individuals
in succeeding generations who are as committed to fanning as they are.
Mr.
Chairman, even with Pennsylvania's success in farmland preservation, much more
needs to be done not only to preserve farmland, but to preserve the economic
integrity of agriculture. It is my hope that this Committee will lead the effort
to 1) provide meaningful tax relief and 2) to assist state- and
local-administered farmland preservation programs. The Open Space Preservation
Act does just that. It not only preserves our open spaces, but provides real tax
relief to free hard-working families from the fear of losing their farms. Thank
you, Mr. Chairman.
END
LOAD-DATE: October 2,
1999 
