From: The Otter - Summer 2020

It’s been three summers since South Dakota’s legislature passed a law offering farmers a 40 percent tax break for planting and maintaining qualified buffer strips along rivers, streams and lakes. Many celebrated passage of the law, including then-governor Dennis Daugaard, who declared, “…I expect many South Dakotans will choose to participate in this program to help improve water quality in our state.”

Unfortunately, the governor’s optimism was unfounded. The buffer program has failed to attract much interest among landowners. It must be classified as a failure.

Shoreline along 11,000 miles of South Dakota streams and rivers, and adjacent to 575 lakes is eligible for the program. And while it is difficult to measure the number of farmers who could apply for the tax reduction, it is reasonable to guess that the number reaches into the thousands. To qualify for the tax break, landowners must grow and/or maintain a strip of perennial grass, trees or brush at least 50 feet wide. The tax incentive extends to buffer strips at least 50 feet wide, and no wider than 150 feet.

In 2018, the program’s first year, 31 landowners from across the state enrolled 318 acres into the program. The following year, 35 landowners received tax reductions on 426 acres. A good share of the second-year participants had also enrolled the first year. Why don’t more South Dakota farmers use the state’s riparian buffer program?

No one disputes the value of riparian buffers. They can be highly effective intercepting and reducing the amount of farm chemicals and eroded soils reaching surface waters from fields growing corn and soybeans. Some suggest that incentives should be unnecessary, that using buffers to protect water resources from soil and polluted runoff should be part of every farmer’s stewardship practices. But if you’re a farmer paying taxes on every acre it becomes a challenge to justify taking land out of production, especially when crop prices are high and the state’s tax structure favors annual crops, not perennial grasses.

Indeed, agriculture and tax experts report that a central issue is money, and that the tax reduction is an inadequate incentive. Tax dollars saved by landowners participating in the buffer incentive program totaled a whopping $2900.

“It’s a profitability issue,” explained Jim Ristau, sustainability director for South Dakota’s Corn Growers association. “The areas where buffers can be grown can be productive land, and although offering a tax incentive is an effort in the right direction, one serious issue facing landowners is trying to equate growing and maintaining a buffer versus growing and producing a cash crop.” According to Ristau, the tax reduction does not offset lost revenues associated with not growing corn or soybeans. “There’s no equivalency,” said Ristau.

Russ Hanson, formerly a property tax specialist for the SD Department of Revenue, pointed out that the tax savings are not worth the time and effort that landowners must go through to modify their land and annually prepare the application paper work necessary to gain the tax savings. “When I worked on the program and had conversations with farmers,” said Hanson, “I heard them say that the process is too time-consuming, plus modifying their land and losing the revenue of cash crops doesn’t pencil out.”

Jerry Kiihl farms along the Big Sioux River near Castlewood, SD. He is an active supporter of buffers, and has about 75 acres of riparian strips bordering about a mile of the river. Kiihl participates in a stewardship program sponsored by the organization Northern Prairies Land Trust (NPLT) that pays him for growing and maintaining buffers through a long-term easement. He has enrolled 52 acres of his buffers in the state’s tax reduction program. Kiihl enjoys the wildlife habitat created by buffers as well as the water protections they provide. “A big problem with the State’s program,” said Kiihl, “is the lack of awareness of it by farmers.”

Jay Gilbertson manages the East River Water Development District, based in Brookings, and is a long-time buffer advocate. His agency has created several of its own programs with various partners to encourage landowners to plant buffers. He thinks the state’s tax incentive plan should address the annual requirement for enrolling. “Originally, the state figured there might be strong opposition to their buffer plan so they set it up as an annual plan, just in case there was strong opposition, but that one-year time-frame has proven to be inadequate.”

Gilbertson agrees with Kiihl about public awareness. “The State did not pursue a promotion plan for buffers and their program, and the State did not offer to help landowners regarding how they could actually enroll land in the program,” he said.

South Dakota Corn Growers executive director Lisa Richardson also pointed to the lack of education about buffers. “We are 110 percent behind buffer strips,” she said. “This bill did not address the [education] issue. It’s not going to get more farmers to participate.”

One thing the State’s bill did do, Jay Gilbertson explained, is acknowledge that buffers have value. “That was,” he said, “an important first step for buffers in our state.”

It’s worth considering how to move forward from that first step. It’s clear the existing program cannot be successful. What are reasonable options? How can the program achieve the establishment of more buffers? Should the State’s program forgive all taxes on buffer lands? How would that revenue be replaced for those who use such taxes, like schools? Should the enrollment period for the buffer tax break be extended to five years or 10 years? Should landowners have that option – regarding timeframe- rather than be limited to a single year? What about an educational plan to promote buffers and the tax incentive? A focused, skillful and strategic effort promoting buffers has thus far not been pursued by the State, the Corn Growers, the federal government or anyone for that matter.

Minnesota passed a bill that mandates buffers along certain waterways. The political fight over the proposal was ferocious, but since implementation many farmers have come around to appreciate the importance of buffers. The state is claiming increasing successes as more and more buffers are planted. 

Buffers provide a significant public good and the wildlife habitat they create is especially necessary in a sea of corn and soybeans, but buffers must be developed and maintained on private property. That’s the hitch. How much is the public willing to spend to help landowners develop buffers? Can government create new programs that generate revenues to subsidize -fully or partially- a more aggressive and successful buffer program? Friends of the Big Sioux River is actively exploring options and ideas to improve the State’s buffer program.