Ag tax exemptions on legislative radar

Ren Featherstone Jared Balcom watches the flow of russet Norkotah spuds as they come out of storage. Size and quality are near perfect, but fresh-pack potato prices are below production cost.

Producers worry that lawmakers may erase state tax breaks

By RENE FEATHERSTONE

For the Capital Press

PASCO, Wash. -- Washington state may be looking for money in farmers' pockets.

"The legislators in Olympia don't want to raise taxes," said Jared Balcom, president of Balcom & Moe in Pasco, a potato growing-packing-shipping company. "That's why they're coming after tax exemptions."

In the wake of a mid-December ag association summit in Ellensburg that Balcom attended, growers' concern is rising over how the legislature will deal with the state's revenue shortfall.

According to potato commission executive director Chris Voigt, a list of agricultural tax exemptions is circulating on Capitol Hill.

"The legislative staff prepared this list, so you know somebody asked for it, which means there will be some legislators that will consider eliminating some or all of these exemptions," Voigt said.

The Washington State Department of Revenue lists 53 agricultural tax exemptions.

The most important is the Business and Occupation tax exemption for ag producers, he said.

"If that gets removed the effect would be huge," he said.

B&O taxes are levied on gross revenue.

"The gross revenue in our industry is high, but our costs are so high that we operate on small margins, in the 2 percent to 4 percent range," he said.

Balcom is also worried about a possible change in property tax structure.

"Farmland currently is assessed as 'open space' that qualifies for low property taxes," he said. "A change in that would have huge ramifications."

Balcom emphasized that no official proposal to remove ag tax exemptions has surfaced in the state legislature.

The stakes are high, Voigt said. "If all exemptions were removed, it would generate $230 million for the state."

Citing a $2.6 billion revenue shortfall, Voigt acknowledged that "it's a very serious time for the state -- everything's on the table."

The spud industry is in a steep down-cycle, Voigt said.

Many processing potato growers saw their acreage contracts reduced by 70 percent, he said.

Things aren't much better on the fresh-pack potato side.

"The price is below cost of production," Balcom said.

"But it's on their radar," he said.

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