SB 449
SB 449 would create an incentive – based on one that is already in law and in use – to encourage landowners to partner with the state to protect water quality and quantity without impacting the state's finances.
Background: Under current law, landowners can qualify for two specific property tax valuation options based on their land management practices. These are commonly referred to as either the “agricultural exemption” or the “wildlife exemption”. While called an exemption, neither option actually exempts property from taxation. Instead, a method of appraisal called income capitalization is used to value the land under both options. This methodology, as opposed to appraising the land at highest and best use, allows the property to be valued based on its productive capacity and more often than not results in a much lower property tax bill for the landowner.
The agricultural option obviously promotes the use of land for agricultural production, while the wildlife option, which was added to statute in 1995, promotes land management practices that benefit both game animals and endangered species. Both of these property tax valuation options share a common theme: the protection of open space and the desire of this state to provide incentives for good land management practices.
Purpose: The purpose of SB 449 is to model a private-sector incentive on the options described above, through which the state would encourage landowners to engage in good water stewardship practices on private lands and benefit Texas’ water supply in a way that is revenue neutral to the state. Both the agricultural and wildlife valuation options have provided major benefits to this state in their respective areas. However, neither option focuses directly on one of the state’s most vital resources: water. Since Texas is a private lands state, and most of the water in this state either flows through or sits under land that is held by private individuals, one of the best ways for Texas to protect water is to encourage landowners to be good stewards of the resource.
SB 449 would add a new water stewardship property tax valuation option to statute that would be very similar to the wildlife valuation option. Like the wildlife option, the water stewardship option would include a list of land management activities, of which a landowner must actively engage three to obtain the valuation. These activities would include:
A. erosion control;
B. habitat stewardship benefiting water quality or conservation;
C. restoration of native aquatic and riparian animal and plant species;
D. implementation of water efficient irrigation practices
E. riparian and wetland habitat and buffer restoration and protection
F. allowance of groundwater and surface water monitoring for data collection purposes in accordance with state water planning or groundwater management area planning; and
G. invasive aquatic plant and animal control
H. donation of all or part of a water right to the Texas Water Trust
I. amendment of a water right to be used for environmental purposes
The creation of the water stewardship valuation option in SB 449 will:
· give landowners another tool in the toolbox in terms of land management that is both incentive-based and cost-effective
· help protect valuable open space land and fight fragmentation
· promote water conservation, and help the state meet its overall water conservation goals
· advance the state water plan and protect water quality in rivers, streams, and aquifers
Impact on State Water Plan: The 2007 Texas State Water Plan predicts that 23% of our state’s future water supply will come from some form of active water conservation. However, currently no framework exists to make sure this happens, and there is no dedicated funding source in place for implementation of the water plan. As a result, incentives like those offered in SB 449 are critical. The water plan recognizes this in a section highlighting the nexus between protecting land and conserving water. This particular water management section, titled Strategies Using Land Conservation, states the following:
“One of the suggested water management strategies emerging in this round of water supply planning is voluntary land stewardship. There is a relationship between the condition of a watershed and the quality and quantity of water that percolates to aquifers or runs off to streams and rivers. In some parts of the state, it is thought that improving the condition of the watershed’s vegetative cover can help clean and increase the amount of water for human use and the environment. Land stewardship practices that help control nuisance vegetation, maintain and restore suitable vegetation in riparian areas, reseed with native plants, maintain open space land and wildlife habitat, conserve wetlands, and control erosion through reduction of overgrazing will promote the health and efficiency of the state’s watersheds and should be encouraged.”
SB 449 and the practices promoted within the bill lay the groundwork for this important strategy to be implemented and do so without the need for an extensive regulatory framework or, most importantly, any state funding.
Revenue Neutrality: As mentioned above, one of the goals of SB 449 is to not only provide an incentive for good water management but also do so in a way that is cost-neutral to the state. SB 449 does this by mandating that any property that would qualify for the water stewardship option first qualify for the agricultural valuation option. This same process was required for the wildlife option when it was added to statute. This was done as a compromise with appraisal districts and as a way to ensure there would be no fiscal impact on the state. The following language from the Comptroller’s website describes the revenue neutrality of the wildlife valuation:
“The wildlife management use is a revenue-neutral use of land. The owner who switches from another agricultural use to wildlife management use must pay the same amount of property taxes that would have been paid if the land had remained in its former agricultural use.”
The water stewardship valuation would work in the exact same way. Landowners who would qualify under the water stewardship option would already be eligible for – and taking advantage of – another type of agricultural valuation. SB 449 allows the legislature to advance sound, incentive-based water stewardship and conservation policy during a tough fiscal climate at no cost to the state.
The above information is to be provided to inform readers, not persuade or otherwise. Information is presented to assist landowners in making informed decisions.
