Tax incentives offered as possible solution to nitrate contamination on SE Minnesota farmland

Months after the Environmental Protection Agency made a formal request that state agencies address nitrate contamination in southeast Minnesota, the House Agriculture Finance and Policy Committee has been learning more about the problem and possible solutions.

A proposal offered Tuesday would try to increase the number of farmers participating in a voluntary program that would have them commit to best practices to protect water by offering tax incentives.

Landowners in southeastern Minnesota would receive a $5 per acre property tax credit for land certified in the Minnesota Agricultural Water Quality Certification Program, under HF4044 sponsored by Rep. Steven Jacob (R-Altura).

The bill was laid over by the committee.

The credit would apply to agricultural land in the eight counties identified by the EPA. Some townships in Dakota and Rice counties were also added by an amendment. Karst topography in this region can make ground and surface water especially susceptible to nitrate contamination.

The credit would be payable on all certified acres beginning with property taxes payable in 2025. Money from the General Fund would be appropriated to compensate local governments such as school districts for lost revenue.

Under the state-run, ag water certification program, farmers must show compliance with current laws and rules, and operate using approved practices that protect water quality, such as no-till farming and continuous cover-crops. Agriculture Department officials say participants have 49% reduction in nitrate loss.

The certification process is a whole-farm risk assessment and mitigation program, said program manager Brad Jordahl Redlin. Every aspect of every acre is assessed, he added.

More than 1,400 operations are certified under the voluntary program.

Jacob’s farm was the sixth in the state to be ag water certified, a process he called easy and seamless.

Rep. Lucy Rehm (DFL-Chanhassen) is concerned the tax credit would be limited to one area of the state.

There were worries when the program started that it would lead to taxpayer-funded incentives to participate in a taxpayer-funded program, said Rep. Rick Hansen (DFL-South St. Paul).

Approximately $3.5 million from the Legacy Fund went to the program in fiscal year 2024.