01/26/2007: "Who Subsidizes Whom?"

To the Editor:

I agree with most of what Eliza Habegger has to say (Guest Editorial) about the benefits of farming in San Juan County. I must praise her for her idealism. But we have mostly hobby farms here. It is doubtful if the income from actual farming activities can even generate property taxes on most farms, let alone the mortgage on farmland purchases at today's inflated prices.

I believe most people would agree that open space, forest, and farmland add great value to a community. San Juan County is blessed to have almost half of her land in this category. 31.44% of parcels in this category pay reduced taxes 15.68% are tax-exempt parcels. However I can't let a myth often stated as a fact to go unchallenged.

Take a minute to read and understand her argument: "financial studies conducted in dozens of communities nationwide have consistently found that farms and open lands generate more tax revenues than they receive back in public services. This holds true even when the land is assessed at its current agricultural use. In comparison, residential land use consumes more public funds than it generates." This quote from her editorial is based on studies that are misleading and biased and lead to false conclusions. (see: Myth of growth and Taxes )

She is correct to say that much of our farmland does not pay fair market rate taxes. Agricultural lands in reduced tax or tax-exempt status shift tax burdens to other parcels. In other words residential land use helps to subsidize farms and most people go along with this because they understand that farms benefit our communities.

However, to assert that residential development does not pay for itself is not true no matter how many times it is repeated. A very convincing case can be made that extremely large homes built on waterfront occupied by part-time residents who use few if any county services help to make all those services more affordable for many families living in moderately priced homes or living on farms.

I am not encouraging this type of housing alternative. I'm only using it as an example, but it is a fact that if there were additional huge waterfront or view mansions occupied only in the summer our taxe rate per capita would decrease substantially. This is an example of an increasing residential development trend that subsidizes all other types of land use.

In the last 12-15 years new construction has increased assessed values by approximately 1 billion dollars countywide. The increase in new construction and the rise in real estate prices factored into to the assessment base help disburse the tax burden to all taxpayers. Because of this tax rates have actually decreased per thousand dollars of assessed value.

Further, the ability for the taxing districts to collect the ‘cost of new construction' (3-4%) and add it to revenues is a bonus that would not be possible without new residential construction. Therefore the cost of services has remained relatively stable while the assessment base has increased exponentially.

When you add the revenues from sales tax paid by new construction and by residents who work and shop and live here the benefit of residents paying into the system is much greater than if the county was all open space or farms with fewer people.

Residential taxpayers have bent over backwards to help farms to succeed. We have subsidized crops and even paid farmers not to farm. This is okay with most people because the farmer feeds us all. It is simply divisive and incorrect to say residential taxpayers don't pay their fair share.

Gordy Petersen
San Juan

(Mr. Petersen writes a column for The Island Guardian; his work can be read at Gordy Petersen )