Taxed off the farm

New Mexico's rural property tax laws could price out longtime residents


Nestled in the mountains of northern New Mexico, Mora County is a patchwork of agricultural properties that have been divvied up and passed down to generations of heirs for centuries. Like many longtime residents, Angela Romero and her brothers and sisters inherited parcels of family land. "Dad had 55 acres and he split it between six of us," she explains. After buying out her sisters, she now owns 21 acres.

Because she’s the Mora County assessor, Romero won’t be too surprised when she gets a property tax bill that’s nearly 20 times higher, perhaps more, than this year’s bill. But other residents may do a double take when they receive their 2009 property tax bills.

In the past, county residents who grazed livestock were eligible for a special property valuation – a low, fixed, per-acre tax on any land used for grazing. Next year, however, tracts of land smaller than 47.4 acres will not qualify for the grazing rate, even if cows, goats or sheep eat the grasses that grow there.

Romero does not own enough land to qualify for the low grazing tax. "But it’s still the same property. We still use it to graze our horses and cows."

Those with fewer than 47.4 acres could see a tax increase from $6 to $115 per acre – the rate for irrigated agricultural land – or possibly even a much higher tax based on the property’s full market value. In sparsely populated Mora County, which has a median household income of $24,515 -- about 60 percent of the national average -- this could have profound effects on residents. "They’re classing people out," says Bruce Frederick, staff attorney at the New Mexico Environmental Law Center (NMELC).

About 600 parcels of land in the county are smaller than 47.4 acres, and nearly all of those are currently taxed at the special grazing rate, according to Romero. "The market here in Mora has gone pretty high," she says. And if the properties are assessed at full market value, "there’s no way people here would be able to pay their taxes. No way."

The change is meant to bring all counties into compliance with the state’s order, says Rick Silva, director of property tax at New Mexico’s Taxation and Revenue Department.

In order to qualify for the grazing tax rate, a tract of land must be equal to or greater than the county’s carrying capacity – that is, the minimum acreage required to graze one “animal unit” (one cow, five sheep or five goats) without using supplemental feed. The carrying capacities that the state is using are based on a 1969 report by New Mexico State University. And currently, Silva explains, Mora and San Miguel counties are the only ones not in full compliance, because they grant the special tax rate to anyone who uses the land for grazing, regardless of acreage. "This is how we’ve been doing it since 1969," says Silva. "This is what all counties have been using since (the NMSU report) was given to us." And, he adds, it’s not fair if two counties aren’t following the same rules as the others.

Residents in neighboring San Miguel County, which has three carrying capacities ranging from 53.3 to 64 acres according to the same NMSU report, are already feeling the crunch of property tax increases this year.

But there is nothing in the statute that directly references minimum land requirements. So where does the 47.4 acre requirement come in? "It’s an inference," says Frederick. "And I think it’s an unjust inference that conflicts with the law."

Using a flat minimum acreage as the measuring stick to determine which properties qualify for special agricultural taxes misses the point, says Marvin Applequist of the Wyoming Department of Agriculture, because variables such as irrigation and soil condition greatly affect the productivity of the land. He says most Western states determine eligibility for special agricultural valuations, including grazing, based on individual assessments of land use and management, as well as income earned from agricultural production, not minimum tract size.

To complicate matters more, in May, the Mora County commission became the third in the region to pass an indefinite moratorium on oil and gas drilling after residents were approached by a landman looking to lease mineral rights.

Not surprisingly, the proposed higher property taxes have fostered speculation that some northern New Mexicans will have to sell surface property or lease mineral rights in order to make their tax payments. Many people feel the tax increases could, in the long run, help companies acquire mineral rights and drilling access.

Healthy farms and ranches are key to maintaining open spaces throughout the West, says Applequist. "Once (farms and ranches) are pulled out of ag, they’re subdivided, and there’s no going back," he says. "And that’s our food base."

Northern New Mexico’s cultural and historical realities accentuate the flaws in the state’s blanket policy. Many families continue to use their small, inherited parcels of land for grazing, often using the property communally. This is especially true of land grant communities, those lands originally deeded to the local residents during the Spanish and Mexican periods of New Mexico’s history.

Many small communities in northern New Mexico are an amalgamation of strangely deeded properties. It’s not always clear where one person’s property ends and a neighbor’s property begins, since many titles predate formal legal descriptions. Instead, many residents have "bounded by" descriptions (for instance, X’s property is bounded on the north by Y’s property, bounded on the south by the Z River, etc.). The historical murkiness of this system makes it a challenge to assess property accurately, and it creates barriers for residents who file protests of the assessments.

"There’s the Tecolote Land Grant," says Gabe Estrada, a rancher in San Miguel County. "They’ve got 800 heirs that live on very small acreages. … They have their corrals, that’s where they work, and they graze out on the land grant." Those "small acreages" would not qualify for the special grazing tax even though many people are using them for grazing.

For the time being, Romero and her staff are working with state officials to complete comprehensive assessments of all properties in the county. Romero is hoping for a change in state policy or a legislative remedy before she has to implement the tax increase. “I’m going to try to hold (the state) off another year,” she says. But barring new legislation, Silva says, the state will enforce the new tax for grazing lands by 2009.

In the meantime, the landowners wait, frustrated and anxious about the proposed tax hike. "Are we here to say the piece of property is not being used for grazing just because it’s less than 47 acres?" asks Sue Strebe, a Mora County real estate agent. "Why should it not be considered grazing land, if that’s what it’s being used for?"

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