This article reflects suggested wording sent to Rep. Adam Bowling for consideration in introducing the House Concurrent Resolution 13.
House Concurrent Resolution 13 was enacted in the 2002 regular Session. The Resolution was based on the knowledge that:
well managed family owned non-industrial forests are the key to sustaining socio-economic benefits from Kentucky’s forests including providing the raw material that fuels the $13 billion in economic contributions from the forest industry sector annually, and
that supporting family forest owners, who own the majority of the forest lands in Kentucky, in conducting sound forest practice is beneficial to sustaining those socio-economic benefits the forest resource provides to Kentucky.
The resolution directed the LRC to study taxes and related policies to identify incentives and disincentives for good forest management practices. This was an effort to find reasons why so very few woodland owners try to improve the quality of their timber and increase the economic productivity of each acre. The product of this research was LRC report 307, which is available from LRC.
Recognizing that the issue of the lack of forest management in Kentucky that prompted Resolution 13 in 2002 still exists, we need to revisit 307. The most important findings were never acted upon, resulting in a continued lack of forest management and the potential unconstitutional taxation of forest land where sound forest management practices were being conducted over the last 19 years.
The property tax issue in Report 307 produced opposing views that need close examination and resolution. The University of Kentucky, Department of Forestry and Natural Resources (UK) citing results of a study that found that, "The property tax burden was much greater on forestland than on cropland when measured as a proportion of earnings." Further, this unequal burden was a result of the use of an agricultural land assessment procedure that was not applicable for the equitable valuation of well managed forest lands. An equal burden is required so the heavier tax burden is unconstitutional according the Kentucky Supreme Court. However, the Kentucky Department of Revenue cited a Supreme Court ruling that said Kentucky also could not constitutionally mandate a particular valuation method. As it stands, UK’s analysis of the current forest land assessment methodology indicates an inequity in assessment of managed forest land compared to other agricultural uses and there are means to fix this inequity while avoiding constitutionality issues that have plagued previous deliberations. Clearly, the billions in economic contributions of our forests to industry and jobs in KY demand that these opposing views be examined and resolved.
Fortunately, in the nearly two decades since research Report 307 was completed, several significant developments have occurred that should be helpful in finding the best policy for improving the productivity of Kentucky's forests including the development of an equitable forest land assessment procedure that could be used by the Department of Revenue in the assessment of a well-managed forest, and the availability of a nationally recognized standard that can be used by PVAs to define well-managed forests.
Therefore, we resolve that University of Kentucky Department of Forestry and Natural Resources and Kentucky Department of Revenue begin work together to produce an assessment procedure for well managed forests to ensure an equitable taxation of these lands and provide for the encouragement of management to help ensure the sustainability of Kentucky’s forests and maximize the socio-economic benefits derived from them. We request monthly progress reports given to the sponsor of this resolution (can be written, verbal or electronic).
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