A34-Lancaster Farming, Saturday, July 13, 2002
Michael Jacobson
Forest Resources
Extension Specialist
Although there is a preferential
tax for forestland in Pennsylva
nia, there are concerns about the
program among private forest
landowners, forest industry rep
resentatives, and county officials.
The preferential tax program
commonly known as Clean and
Green bases the assessment on
the land’s ability to produce in
come in its current use, rather
than its fair market value. The
Pennsylvania legislature created
Clean and Green in 1974 with
the objective of conserving farm
and forestland by providing tax
incentives for landowners not to
convert their land to other uses.
The program objectives are espe
cially important in urbanizing
counties where development
pressures are high.
The preferential assessment
under Clean and Green is formu
la-based. It uses projected timber
yields, current stumpage prices,
and interest rates to determine
use values for an 80-year timber
rotation. Until recently, landown
ers were less concerned with the
formula’s use values, since
stumpage prices were low and in
terest rates high. Thus, the as-
Pa. Class I Milk Price
Announced For June
HARRISBURG (Dauphin Co.) The Pennsylvania Milk Market
ing Board (PMMB) announced the prices to be paid to Pennsylvania
dairy farmers for June Class I milk (beverage) as an average of $15.08
in the western areas of the commonwealth, and an average of $15.57
in the central and eastern areas of the commonwealth. These prices do
include the over-order premium of $1.65 per 100 pounds of milk.
Farmers whose milk production is pooled under a federal order will
receive a marketwide blend price based upon the value of all classes of
milk. However, the blend price received will vary as the component
composition of a farmer’s milk differs from the established bench
marks of 3.5 percent butterfat, 2.99 percent protein, and 5.69 percent
other solids.
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sessed value for forestland re
mained relatively low. However,
in the 19905, low inflation (result
ing in lower interest rates) and
rapidly escalating stumpage
prices drove the Clean and Green
assessments for forestland higher.
Nevertheless, a recent Penn State
study shows only 23 percent of
the landowners surveyed believe
that the Clean and Green assess
ed values are too high.
Currently, landowners enroll
in the voluntary Clean and Green
program only in counties with re
cent* reassessments. Many of
Pennsylvania’s 67 counties have
not recently reassessed property
values; so assessed values are
lower than the use values avail
able under Clean and Green.
There were over two million
acres (one-sixth of private forest
land) enrolled in the Clean and
Green program in 2000.
An issue with landowners is
the so-called deferred income
problem. Unlike farmers, many
forest landowners only have tim
ber income from their forestland
once in the lifetime (when they
harvest). However, they pay an
nual property taxes.
Calculations show that even
with the preferential assessment,
the compounded value of the an
nual tax payments over an 80 to
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100-year rotation is generally far
greater than the revenues from
timber harvests. Another land
owner complaint is that actual
forestland value can vary quite
widely within the same county.
However, the Clean and Green
assessed rate within a county is
the same for all landowners.
Many tax assessors and com
missioners say that the assessed
values derived from the current
use value formula are too low in
their counties. Traditionally,
property taxes fund schools and
local governments.
One particular concern among
county officials is a recent
amendment to the law. The
amendment allows the land
under a house, known as the
“farmstead,” to be assessed at
Clean and Green rates and count
toward the 10-acre minimum
area. This provision is especially
hard on rural counties where the
fair market valuation for the
“farmstead” acre comprised a
significant portion of their tax
revenues.
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The provision may also en
courage developers to subdivide
larger properties into 10-acre
“mini-estates” that meet the size
requirements for Clean and
Green, but do not provide the
kind of open space that the law
was intended to protect.
These “mini-estate” owners
could pay considerably less in
property taxes than people who
own lower-value residences on
smaller parcels in the same coun
ty-
As large forestlands are subdi
vided, it often makes forest man
agement more difficult, and
many of the smaller parcels are
essentially removed from the
land base that supports Pennsyl
vania’s forest products industry.
Another point of contention
with Clean and Green is that the
penalties for withdrawing from
the program are not high enough
compared to the potential profit
from developing the land.
Many government officials be
lieve that the penalties do little to
prevent developers from purchas
ing land and enrolling it in the
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program until the time is right to
develop the property. In this way,
the program can reduce the cost
of land speculation, potentially
encouraging development.
As with any tax, there are com
plaints from all sides: county offi
cials, landowners, rural counties,
and urban counties. What is
clear, though, is that there are is
sues to address with the Clean
and Green program for forest
land. One solution that can help
is local tax reform at a larger
scale, addressing school funding
and income and sales taxes.
For more information about
Clean and Green, request the free
publication: Forest Finance #4:
Understanding Forest Property
Tax Assessment in Pennsylvania.
The publication is available from
the Pennsylvania Forest Steward
ship Program by calling
1-800-235-WISE (toll-free), send
ing e-mail to RNRext@psu.edu,
or writing to: Forest Stewardship
Program, Forest Resources Ex
tension, The Pennsylvania State
University, 7 Ferguson Building,
University Park, PA 16802.
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