At last month’s meeting of the Current Use Advisory Board, William Johnson of the Tax Department noted that “there will be a lot of bickering” about the Current Use policy in the Legislature next year.

The reason, he said, is that the policy costs a lot of money. It reduces property tax revenue by some $35 million. If that money all went into the Education Fund, Johnson said, the statewide school property tax rate might be some four cents lower. With legislators eager to keep residential tax rates down, Johnson said, “the debate will be on.”

Actually, the debate will be on before the Legislature reconvenes in January. The Legislature’s Joint Fiscal Committee meets next month, and Current Use is likely to be on its agenda.

As Johnson indicated, the debate could get heated, and his remarks illustrated why. On the one hand, almost everyone (certainly including Johnson) favors the policy, under which farmers and woodlot owners pay property tax based on the revenue potential of their land, not its full market value. The policy is credited for keeping Vermont’s working farms and forests economically viable, with financial and environmental benefits for everybody.

On the other hand, there’s that cost to the other taxpayers that Johnson mentioned. Keeping farm and forest property taxes lower makes residential property taxes higher.

And in most states, surely including this one, anything that tends to make residential property taxes higher is political dynamite. In fact, as some see it, there has been an intertwined relationship between Current Use and residential property taxes for more than a decade, and today’s Current Use controversy stems from an effort to alter that relationship.

Among those who see it that way is Sen. Mark MacDonald, a Williamstown Democrat, a member of the Finance Committee, and identified by defenders of Current Use as one of the lawmakers who wants to get more money out of the farm and forest owners.

Not that MacDonald opposes Current Use. That would be hypocritical because he owns farm and forest land and benefits from it, as, he said, do many other members of the Legislature. (And many members of the Current Use Advisory Board, including Chairman John McClain. In some circles, that would be considered a conflict of interest. In Vermont, it’s just the way things are).

But to MacDonald, Current Use in its present form was part of a political agreement reached in 1997 when the Legislature passed Act 60 and created three tax breaks: Eliminating the machinery and equipment tax paid by businesses into the Education Fund; expanding and guaranteeing Current Use (as opposed to subjecting it to the annual appropriations process); and “income sensitivity” (though Macdonald doesn’t like the term), allowing most homeowners “the right to pay school taxes based on income,” rather than the full market value of their properties.

The problem, according to MacDonald and his allies, most of them Democrats in the Legislature, is that in the last few years Gov. Jim Douglas’s Administration has upset the balance by fiddling with the tax break that goes to the home-owners.

“What the Administration has done in last several years is to say that some homeowners are not paying enough in property taxes based on their income,” MacDonald said, “Then when the Senate Finance Committee suggested the Current Use people kicking back in to share the burden, they suddenly showed up and said, ‘how come we’re being picked on?’”

To Ed Larson of the Vermont Forest Products Association, MacDonald is “listening to a populist constituency that has this vision of rich landowners from outside getting a tax break, coming up here, driving up our property values and posting the land.”

Indicating that to some extent this dispute, like so many Vermont political battles, is tribal, each side assuming the worst of the other based on its own stereotypes.

But it’s more than that, in part because Current Use is likely to grow as the full market value of rural property continues to rise, creating an incentive for landowners to enroll in the program.

Whether today’s Current Use enrollees feel picked on, they certainly oppose any change that might raise their taxes. In fact, Larson told the Advisory Board that, if anything, taxes on forest land owners should be lower because, with prices so low, their taxes eat up half the revenue they are getting from the timber.

In a later interview, Larson acknowledged that he’d be happy with the status quo.

He’s not likely to get it because even many of Current Use’s champions acknowledge that some landowners are abusing the policy and that it now is being exploited by some property owners who are not what the original designers of the program had in mind.

To be eligible for Current Use, land has to be actively farmed or logged. At the Advisory Board meeting, members talked about multi-acre chunks of farmland that had been taken out of production but was still being taxed at its “use” rate. Furthermore, nobody disputed Deb Kingbsbury of Vershire, the self-appointed gadfly of the Current Use issue, when she said that some property-owners were “just using the program as a tax break.”

Deb Brighton, the natural resource economic policy analyst from Salisbury, who was once director of the Current Use program, said it was initially intended to benefit “real farmers,” (and by extension, “real loggers”) meaning those whose livelihoods depend on their income from agriculture or stumpage.

Now she said, a good deal of the land is owned by people whose “income comes from somewhere else. “ They are still providing the valuable service of keeping the land from being developed. But, Brighton said, “that person would do the same thing if you only paid him $25 an acre,” rather than providing the full benefits of Current Use.

Easier said than done, she acknowledged. Deciding which land is being preserved as “an amenity value” as opposed to a “production value” is somewhere between difficult and impossible.

That doesn’t mean nothing can be done. In fact, it’s quite likely that something will be done to get more revenue out of Current Use land. Some means of accomplishing that have to do with the technicalities of implementing the policy, as tentatively recommended in a draft proposal worked out by some environmentalists who support Current Use, and who will discuss their draft at a meeting in Randolph next week.

The danger, in the view of many, is that, in Deb Brighton’s words, simply raising the “use value” on which the land is taxed, “wouldn’t work for people really using the land.”

In other words, it might put small and medium-sized farms and woodlots out of business, a result nobody wants.

Expect, as Bill Johnson said, “a lot of bickering.”

NOTE: Reluctant though the News Guy still is to continue a story over the weekend, once again it seems necessary. Here, the first of two parts.

So your property taxes are going up. Aren’t everybody’s?

Actually, no. Some property owners in Vermont are paying less in property taxes this year than last year or the year before. Nor are these indigent owners of dilapidated shacks on weed-filled lots. Some are rich folks who own thousands of acres of productive land.

And who has made it possible for their tax bills to be lower?

You have. Or, to be more precise, the people of Vermont have over the last few decades, and that probably includes you. Furthermore, almost nobody thinks that the policy allowing these land-owners to pay less in taxes is a bad policy that ought to be abolished.

Which is not to say that there is no controversy here. There has been a great deal, and it may be about to boil over again as this year fades and the Legislature gets ready to resume in January.

The object of this controversy is the Current Use program, which is really not a program as much as a policy. Under this policy, established in 1978 but substantially revised in 1997, the taxes on farm and forest land are based not on the land’s market value, as are the taxes on most other properties, but on what one supporter called “the income-generating potential of the land.”

Which is less than full market value (or if it isn’t, the property owner doesn’t have to use Current Use), meaning the taxes will be lower.

In other words, though it’s considered unacceptable to say this in polite Vermont society, it’s a tax subsidy. Vermont’s other taxpayers – those who own mere houses, shops and the like – pay more so farmers and forest-land owners can pay less. Fiscally speaking, it’s a tax expenditure, no different from collecting the full market value property tax and then sending each farm and forest owner a check.

None of this means it’s a bad policy. It does render inconsistent the claims from farm and forest owners that they are devotees of the “free market.” But that makes them no different from other interest groups, all of whom love the “free market” when it benefits them and all the public subsidies they can get.

In fact, as mentioned, there is something close to universal agreement that Current Use is good policy, that it is one reason Vermont retains as much farm and forestland as it does. Good not only for agriculture and the forest products industry, but for tourism. And that’s just the economic benefit. Having farms and forest is also what makes Vermont the kind of place in which most Vermonters want to live.

So why the controversy?

First, because Current Use is expensive, and likely to get more expensive. According to the Tax Department’s William Johnson, it “cost the Education Fund (financed largely by the statewide education property tax) $35 million this year ($33,913,934 according to the official report, but that’s close enough), and will soon be $50 million a year.” The state also reimburses local governments for the money they lose because of Current Use. That now amounts to roughly $11 million.

So as this year’s Legislative session drew to an end, lawmakers scrounging around for revenue looked into getting more from the land-owners enrolled in Current Use. One idea was a cap on how much some landowners could benefit from the policy. The cap would have brought in an additional $1.6 million.

They didn’t get it, thanks to an unusual political coalition in which the Farm Bureau and the Vermont Forest Products Association were supported by the organized environmental community, with whom they are often at odds. After what both sides described as some rather heated discussions, the legislators agreed to wait.

But not forever. The burden is now on the producer/environmentalist coalition to come up with some ideas for raising something close to that $1.6 million without over-burdening the farmers and woodland owners. Meeting as the Forest Roundtable, some of them have come up with a draft “options report” they plan to discuss at a meeting in Randolph next week.

The other reason for the Current Use controversy is the belief, or at least the suspicion, that some landowners who benefit from it don’t really need it or deserve it. The draft report of the pro-Current Use Forest Roundtable acknowledges that the tax break for property owners enrolled in Current Use has steadily gone up, leading to a growing “perception of unfairness.”

Fortunately for Current Use supporters, this perception has not yet grown into anything like a political movement. Unfortunately for them, the (so far) lone public agitator for scaling back some of the tax breaks is a vivacious, persistent, energetic woman who is a property lister in the town of Vershire as well as a self-styled “Jane Q. Public” who keeps showing up at public meetings to point out what she considers the unfairness of the present system.

Not for the first time, Deb Kingsbury attended last month’s meeting of the Current Use Advisory Board to argue that some property owners are “using (Current Use) as a tax break,” and that too much of the benefit goes to out-of-staters.

Like almost everyone else, Kingsbury favors the basic idea behind Current Use to help farmers and foresters hold onto their land.

“But we’re giving such a big tax deduction while everybody else is still paying,” she told the Board, whose members set the per-acre value of the farm and forest land.

For forest land, that value is now $123 per acre, lower than it has been in years. The result is that even as tax rates have crept up, some tax bills have gone down. In the town of Bridgewater, for instance, where there are 83 properties enrolled in Current Use, the Town Clerk’s office reported that the tax rate had risen from 1.3324 last year to 1.6949. But a year ago forest land was taxed at $136 an acre. The tax for some property owners, then, has declined by some $10 an acre, a decline of hundreds if not thousands of dollars even as other property-owners are paying more.

“We’re giving an 88.4 percent tax break,” Kingsbury said, citing the latest report of the Division of Property Evaluation and Review. “Nobody would not take a 68 percent tax break.”

But as Ed Larson of the Forest Products Association pointed out, the land value has been set so low because the price forest owners are getting for their product has plummeted.

“We’d be happy to pay more taxes if we made more money,” Larson said, claiming that most forest owners are now paying in property taxes roughly half the revenue they get from selling their product.

Capping the current use benefit or altering the formula to eke more money out of it, threatens to destroy the “core premise, the established principle,” that the tax should be based on how much money could be made the land, not the development value of the land or the wealth of the land-owner, said Jamey Fidel, the forest program director for the Vermont Natural Resources Council.

For at least two reasons, though, there is more going on here. One is that the Current Use controversy does not stand alone. Instead, it is related to the larger state fiscal predicament. Second, while almost nobody wants to raise the taxes of hard-working Vermont farmers and loggers, driving them out of business and their land into suburban-style development, not everyone enrolled in current use is really in the farming or logging business (or, for that matter, Vermont).

Trying to distinguish who is really what, though, isn’t easy, as shall be explained Monday