Pa. Farm Bureau’s Ebert discusses budget, other issues

AFP Correspondent

HARRISBURG, Pa. (April 7, 2015) — Pennsylvania Farm Bureau president Rick Ebert addressed several pressing matters facing the farm community during their annual State Legislative Conference on March 31.
While Ebert was reviewing priority issues with the press, over 350 PFB members were meeting with members of the Pennsylvania General Assembly.
Two particular issues will be spotlighted in the next few months as the legislature deals with the state budget—various tax proposals and Pennsylvania’s huge unfunded pension liability.
Ebert said that while Governor Wolf’s budget proposal is a good starting point for discussions, PFB has concerns.
The governor’s tax plan reduces school district real estate taxes. The proposal provides property tax relief to homestead and farmstead properties.
However, only farm buildings on the family’s ‘home’ farm would be included as ‘farmstead.’ That means that farmland, which represents the largest part of a farmer’s school tax bill, would not be included in tax relief.
Further, Ebert said the plan does not prevent local school districts from wiping out the reductions in property taxes by increasing the millage rates.
The corporate tax rate is cut by 50 percent in the plan.
But, Ebert pointed out that most farm families would not benefit, because the majority are sole proprietorships, partnerships or “S” corporations, which pay taxes as individuals, not corporations.
PFB supports the Governor’s position to prevent a natural gas severance tax from being deducted from a landowner’s royalties. However, Ebert explained that PFB believes that protection will only be enforceable on new leases; many existing leases allow taxes related to gas production to be deducted as a ‘cost’ from royalty payments.
For over a decade, Farm Bureau has been seeking action to address the unfunded liability of the public pension system, now about $56 billion.
If no action is taken, Ebert said, families can expect to bear the burden through higher property taxes. Since property taxation is the source of income for school districts, and farmers own large amounts of land as part of doing business, farmers will face a larger proportion of this burden when taxes rise to pay for the under-funded pension system.
Ebert summarized, “The bottom line for farmers is that sustainable property tax reform efforts will not be achieved unless pension reform is addressed as part of the solution.”
In another matter, Ebert expressed disappointment that the budget does not include increased funding for Penn State’s agriculture research and cooperative extension programs.
PFB says that farms rely on agriculture research advances to help improve productivity and combat diseases.
Also the Extension employees help farmers keep current on new regulations and conservation practices.
Ebert was pleased with the increase in the Land Script Fund, which assures that the Extension programs will not be cut.
Regarding proposed legislative actions, PFB would like a change in the inheritance tax exemption to cover limitations imposed by recent interpretations.
Situations such as the deceased leaving the farm to a corporation or limited liability partnership as long as the owners are deceased family members, PFB believes, was the law’s original intent.
Fairness and transparency from gas companies in royalty payments is another situation that Ebert indicated needs a legislative amendment.
Many farmers do not receive the state-mandated 12.5 percent in royalties for gas extraction because of gas company deductions.
The companies claim the deductions are costs associated with the capture and transmission of gas. In numerous cases, the farmer-landowner has received next to nothing or even nothing.
With respect to the Chesapeake Bay TMDL lawsuit against the Environmental Protection Agency, Ebert said oral arguments were heard by the 3rd Circuit Court of Appeals in November, and the Farm Bureau is awaiting that opinion.
PFB is closely monitoring another EPA proposal, Waters of the United States. Ebert pointed out that EPA has not recognized all the improvements that farmers have implemented and still continue, such as no-till systems, cover cropping and other good agricultural practices.
EPA has recognized that their models are flawed and out of date; consequently, farmers have not been getting the benefit of their improvements in EPA’s analysis.
Gov. Tom Wolf presented highlights of his budget to PFB members during the legislative conference’s luncheon.
Pointing out that Pennsylvania is close to the richest markets—Philadelphia, Pittsburgh and Washington, D.C., Wolf said, “No other place in the world can say that.”
The governor noted that Pennsylvania has been dominant historically.
Now, human capital expertise, higher education, trade from exports and ancillary skills position Pennsylvania for future growth.
Wolf proposes making the business tax climate competitive by cutting the corporate net income tax rate, investing in infrastructure to facilitate transportation, and increased funding through taxation of Marcellus Shale to improve education.