FINAL BILL REPORT

SSB 6512

                                  C 253 L 88

BYSenate Committee on Agriculture (originally sponsored by Senators Hansen, Barr, Halsan, Bailey and Rinehart)

Exempting land enrolled in the federal conservation reserve program from state property and excise taxes.

Senate Committee on Agriculture

House Committe on Agriculture & Rural Development

Rereferred House Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

With the inception of the federal conservation reserve program (CRP), specific questions have been raised over the department's policy regarding CRP taxation in four areas:  open space, business and occupation, sales and use, and the previously repealed inheritance tax.

The Department of Revenue has confirmed that under its policy the current use classification of open space lands and the value of property for tax purposes is not impacted by participation in the CRP; payments received from the federal government under the CRP are not subject to the state business and occupation tax; expenditures for "vegetative cover" (such as seed, fertilizer and spray) for use on land enrolled in the CRP are exempt from the state sales and use tax; and the special use (agricultural use) valuation will continue on lands enrolled in the CRP eliminating retroactive impact from the repealed inheritance tax laws.

Concern was raised that while these areas are addressed in policy, they are not addressed in statute.

SUMMARY:

The sales of feed, seed, seedlings, fertilizer and spray materials to participants in the federal conservation reserve program, or its successor, administered by the United States Department of Agriculture, are exempt from the state sales and use tax.

The state business and occupation tax shall not apply to payments received for lands enrolled in the federal conservation reserve program or its successor.

The definition of farm and agricultural land under the open space program shall include land enrolled in the federal conservation reserve program or its successor.

VOTES ON FINAL PASSAGE:

      Senate    46     0

      House 79  15

EFFECTIVE:June 9, 1988