The state Revenue Department wants to extend farming tax breaks to those who have animals but don’t necessarily breed them — think 4-H horses — but drawing the line between pet owners and real farmers is tricky
Lynn Glover pets Angel, one of the three horses at her Granger-area home on Dec. 16, 2008 at feeding time. Glover's family lives on just over two acres and consider their horses pets, but proposed changes to property tax laws for rural land may open the door for them to claim a tax exemption previously reserved for true farmers.
GRANGER — Gary and Lynn Glover call their three horses pets.
Growing up, their daughters, Stephanie and Amanda, showed horses for 4-H and rode them in barrel racing. Today, the family members ride them for fun now and again, pet them for relaxation and, twice a day, feed them hay and grain.
They sometimes jokingly call their Nelson Road home "The Hungry Horse Ranch."
They don't, however, call it a farm.
"We don't seriously consider it a farming operation," says Gary Glover.
But they might under some proposed changes to property taxes.
The state Department of Revenue has proposed extending farming tax breaks to those who have animals but don't necessarily breed them.
It's an attempt to keep up with the changing face of agriculture, says Mike Gowrylow, a department of revenue spokesman. Current rules have been around since 1971. Farms are bigger now and more specialized, while suburban communities encroach more and more on agricultural lands.
Drawing the line between pet owners like the Glovers and serious farmers will be tricky.
"We need to make sure whatever we come up with is for legitimate agriculture purposes and not open huge loopholes for people to maybe get tax breaks they don't deserve," Gowrylow says.
In the Glovers' neighborhood, agricultural land is taxed at roughly $27 per acre. The exemption would cut that by more than in half.
Horse owners are just one example. The new rules also could affect people who pasture a few goats or calves each year but slaughter them for meat in the winter.
The issue boils down to open space. Enacted in 1970, the Open Space Taxation Act encourages property owners to leave land undeveloped.
Open space includes a variety of categories, but the best tax breaks go to "commercial agriculture purposes," land that contributes to the food supply or generates an income for the family. Property of any size could qualify but those who own less than 20 acres of landmust prove that they earn a certain amount of income from the farm. That income requirement varies based on the size of the farm.
Here's the catch: When property owners change their minds and remove their land from open space, they must pay seven years of back taxes, plus interest, at the higher rate.
When it comes to animals, current state law requires breeding, feeding, managing and marketing to qualify as commercial agriculture. But different county assessors enforce it differently, Gowrylow says.
For example, in Yakima County, Assessor Dave Cook allows the exemption for someone raising a steer for slaughter.
Revenue leaders and some state legislators propose removing the breeding requirement to make it easier for assessors to enforce consistently throughout the state.
The issue reared up in the form of horse stables in King County.
The assessor's office and the planning department in King County, where open space is hard to come by, had been extending the commercial agriculture exemption to horse boarding facilities and riding schools. Property owners paid a fraction of the taxes they would otherwise owe.
The issue arose earlier this year after a King County assessor's employee asked the State Department of Revenue if horse boarding facilities qualified for a tax break, Gowrylow said.
Property owners complained, so Revenue told county assessors across the state to put the matter on hold until they come up with a temporary policy and ask the state legislature to pass new laws. The legislature convenes in Olympia Jan. 12 through April 26.
State Representative Bill Hinkle, R-Cle Elum, plans to sponsor such a bill.
Hinkle believes horses -- even at a small place like the Glovers' -- are a legitimate part of the farm industry. Horses eat hay, sleep in straw bedding and graze in open pasture just like cows.
"Whether you're raising horses or cattle, when you get to the back porch, your boots smell the same," Hinkle says.
Keeping horses out of commercial agriculture is driving horse industry out of the state, Hinkle argues.
Yakima Valley horse owners are torn, but they generally favor removing the breeding requirement.
"Anything that involves animals for income should be considered open space," says Roger Hoff, a Thorp area cattle and horse rancher.
However, they don't want hobby farms to abuse tax breaks. In Washington, counties assess the same overall amount every year. So, when one person's property taxes go down, everybody else's go up.
Dave Cook, Yakima County assessor, contends the commercial farming exemption should be reserved for people who contribute to the food supply.
"My food prices didn't go down because (somebody) is growing horses," Cook says.
And, he fears, if horse owners qualify, owners of dog kennels might be able to apply.
Cook suggests letting horse boarding facilities reap a tax benefit under a different category of open space that rates a property's public benefit, such as two privately owned baseball fields in Naches. Golf courses sometimes fit that bill, too.
Cook doesn't know how many people would apply for the new benefit, if passed. There are 9,000 or so open space parcels in Yakima County, but many farmers who would easily qualify choose not to apply to avoid the seven year penalty.
Yakima County is home to 5,616 horses, according to the 2002 U.S. Department of Agriculture census. But that number only includes horses on a farm, which Agriculture defines as a property that sells at least $1,000 of agricultural goods.
Gary Glover grew up in a farming family from Kansas. He and his wife, Lynn, helped Gary's parents for many years run a farm with alfalfa, apples and cattle east of Granger. Family photos show their daughters petting their grandparents' cows and wandering through their fields.
The farm was sold at least 10 years ago.
Their current home and the 2 acres they now own sit on property that was once a working farm. But they built there for the peace, quiet and sunset views of Mount Adams. They've never sought a property tax break.
But if a loophole appeared that provided them a tax break, they might consider it, Gary says. Horses can cost up to $2,500 per year to feed.
"Anything to offset the cost of these eating machines," Gary says.
* Ross Courtney can be reached at 930-8798 or firstname.lastname@example.org.