‘Agriculture’ vs. ‘Other Agriculture’

By Glenda Mostek, CNGA Executive Director

Are nurseries and greenhouses ag? Are we not ag? Are we some nebulous classification of ‘other ag,’ and what does that mean for us?

Glenda Mostek CNGA Executive Director

This summer I learned way more about ag classifications in the state tax system than I ever thought I would know. This kind of sums it up: The legislature creates different definitions for different purposes. ‘Agriculture’ means one thing to the Department of Agriculture, a different thing to the Department of Revenue, and yet something different to the Department of Labor.

I recently worked with a member who had a business personal property audit completed by their county. When the valuation of their personal property (heaters, vehicles not licensed by the state, cold frames, soil mixers, etc.) was completed, they were surprised to discover that these items were not exempt from taxation since the business was agriculture. I was surprised, too! We promptly began a long series of phone calls to assessors, lawyers, lobbyists – who had been involved with the 2014 bill – and the Department of Agriculture. My understanding was the legislation passed in 2014 that CNGA fought long and hard for, stated that nurseries and greenhouses were AGRICULTURE.

Turns out, not quite.

Senate bill 14-043 included nurseries and greenhouses as ‘other ag’ for the purpose of county property tax assessment. Property tax assessment for ’other ag‘ is higher than agricultural but (generally) lower than commercial. ‘Other agricultural’ land is valued using the market approach whereas agricultural land is valued based on an income approach that uses the productivity of the land as the starting point. This is usually lower than the market value of the land. However, the building values are probably the same for agricultural compared to ‘other agricultural.’

So why did we run this bill in 2014 anyway? Well, it gave nurseries and greenhouses some certainty in the land assessment evaluation process, and ended nurseries and greenhouses having to appeal if their land was assessed as commercial rather than ‘other ag.’ And, there are some additional benefits to being named as ‘other ag’ in the statute, although, as I said above, the legislature creates different definitions for different purposes, and the meaning of ‘agriculture’ is not consistent across state government.

The areas where it is most beneficial for our businesses to be considered ‘ag’ or even ‘other ag’ is in the exemption from state sales and use taxes imposed on certain items used in agricultural production, and on the ag exemption from overtime rules (which were significantly changed in the 2021 legislative session). In 2019, GreenCO was key in passing HB-1329 Sales Tax Exemption for Fertilizer, which specifically called out fertilizer as an ag input that is exempt from state sales tax.

It appears that some counties consider nurseries and greenhouses ‘ag’ when it comes to business personal property tax, and some don’t. This is an angle CNGA will continue to pursue.

GREENCO has, in the past, supported bills modifying Business Personal Property Tax for ALL businesses, as this is considered to be a regressive tax. County governments do not support these bills because they mean a loss of revenue to the counties, and none have passed. We continue to work to find ways to make it easier for your to do business in a changing world. If you have something that is keeping you awake at night, don’t hesitate to call me at the office and share your thoughts.