Ag Exemption, Review Bill Fails On House Floor

A bill seeking to change automatic classification of large tracts of land as agricultural land failed in the House on Thursday, March 20.

House Bill 27, brought by Rep. Sherry Essmann, R-Billings, would have introduced an application process for agricultural classification and a review process for properties already considered agricultural land.

The bill targeted properties that claim an agricultural exemption, but aren’t actually being used for raising livestock or crops. Currently, agricultural exemptions are automatically granted for properties more than 160 acres. Properties that are less than 160 acres have to apply to the Montana Department of Revenue to receive an agricultural designation.

Properties not qualifying for the agricultural exemption would instead be switched to Tax Class Four, which is residential.

The bill would have introduced ”sustenance use land” and “nonproductive forest land” as new tax classifications. The Department of Revenue supported the bill after an off-session working group tried to address the issue following a similar bill that failed during the 2023 session.

“What became crystal clear to the working group was that the current statute of ag classification eligibility is providing preferential classification value to properties that are not engaged in quantified ag use,” Essmann said on the floor Thursday. “Montana’s land is a right, but our ranchers, our farmers and our communities depend on it. But for too long, we’ve seen speculators buying thousands of acres and take them out of production and turn them into their personal playgrounds.”

Properties 640 acres and less would need to show they produced $1,500 or more in income from agricultural use to qualify for the agriculture exemption. Tracts of land receiving the exemption would have to show an additional $6 for every acre over 640. So, if a property was 650 acres, it would have needed to show an income of $1,560.

The bill received opposition on the floor and debate only ended with a cloture vote, a procedural move to stop debate.

Opponents said it would hurt small farmers, as well as operators of commercial operations like corn mazes, pumpkin patches and dude ranches.

All three of those uses, along with agrotourism operations, were not eligible to be considered agricultural land under the bill.

Rep. Caleb Hinkle, R-Belgrade, spoke against the bill on the floor Thursday, saying it “threatens to undermine the very backbone of our state.”

He said it would “punish” small property owners and “strangle” family farms.

“This bill, if passed, claims to target the fraud agriculture,” Rep. Jed Hinkle, R-Belgrade said on the floor, “But instead captures good, well-meaning Montanans whose dream was to own some property, raise their livestock, or plant their gardens, orchards and actually be able to afford living and owning the land.”

The bill failed 60-40 on the floor.