Minnesota farmers could see a clean water tax break

Keep it clean.

That’s the idea behind the Minnesota Agricultural Water Quality Certification Program. And now efforts at keeping the water clean on the state’s farmland could come with a financial incentive.

Sponsored by Rep. Steven Jacob (R-Altura), HF363 would create a new agricultural water quality property tax credit of $5 per acre of qualifying land. To be eligible, property must be classified as 2a agricultural or 2b rural vacant, be certified as enrolled in the program, and be in one of eight counties in Southeastern Minnesota: Dodge, Fillmore, Goodhue, Houston, Mower, Olmsted, Wabasha or Winona.

The credit would only be used to reduce net tax capacity-based property taxes and would be the final credit applied in the computation of net property taxes. Appropriations for the credit would come from the Clean Water Fund. Hence, when the House Taxes Committee approved the bill, as amended, on Wednesday, it referred it to the House Legacy Finance Committee, which oversees fund projects.

Rep. Aisha Gomez (DFL-Mpls) called it “unorthodox and unprecedented” to have a property tax refund funded by the Clean Water Fund.

Brad Jordahl Redlin is manager of the agricultural conservation services section at the Department of Agriculture, which oversees the water quality certification program. He believes the property tax credit could serve as an incentive to increase enrollment in the program.

“If you’re against the bill, you’re against clean water,” Jacob said, but Gomez took issue with that characterization.

“We’ve thrown billions at this issue and the outcome is unacceptable,” she said, adding that agricultural land already has some of the state’s lowest property taxes.

But Jordahl Redlin countered with several statistics that he said demonstrated that the program was helping make significant progress in improving water quality on agricultural land.

The Revenue Department estimates that approximately 221,000 certified acres and 280 producers enrolled in the program are located in counties that would be eligible for the proposed water quality property tax credit. It also estimates the change would reduce the Clean Water Fund by $1.1 million in fiscal year 2027 and around $1.2 million in each year of the ensuing biennium, with the General Fund increasing about $40,000 each year thanks to an income tax interaction.

The Minnesota Agricultural Water Quality Certification Program is voluntary and provides participating landowners technical assistance related to practices that promote water quality. Landowners are deemed in compliance with any new water quality rules or laws while certified; certification lasts up to 10 years.