00:00:00:05 - 00:00:05:06 Amanda Funk Morning, everybody. 00:00:05:08 - 00:00:25:03 Amanda Funk We are coming together today to do our by annual reappraisal review and committee discussion, committee discussion and considerations before we start. Scott, if you want to welcome everybody and. 00:00:25:04 - 00:00:29:02 Scott Mendenhall Can we go around and just the introduction? 00:00:29:04 - 00:00:43:24 Amanda Funk Absolutely. My name is Amanda Funk. Department of Revenue Business Analyst yeah, in charge of the in charge of the forest. 00:00:44:01 - 00:00:47:13 Robin Rude I am Robin Rude, Deputy administrator of the property assessment division. 00:00:47:17 - 00:00:51:23 Tiffany Pouliot-Harris And Tiffany Harris, evaluation unit manager. 00:00:52:00 - 00:00:56:21 Todd Olsen Todd Olsen is a committee member from Fergus County. 00:00:56:23 - 00:01:04:00 John Lewis John Lewis same as Todd Ranch, Golden Valley County. 00:01:04:02 - 00:01:10:16 Nick Hagerty I'm a professor at Montana State Department of Agriculture and Economics 00:01:10:18 - 00:01:37:03 Scott Mendenhall Scott Mendenhall, deputy director. Not been at this meeting before someone through some other work. So my background so I grew up on a ranch in Wyoming. We still have an ownership level there, and I have a masters in Wyoming, so I'm an agy so happy about that. Some that. 00:01:37:05 - 00:01:40:23 Cindy Johnson There are a lot of you guys. 00:01:41:00 - 00:01:58:19 Cindy Johnson Is is very helpful because we don't have enough legislators that have. So I'm Cindy Johnson, I am the president of Montana Farmers Federation, and I'm east of Conrad small greens and post crops and oilseeds. 00:01:58:21 - 00:02:03:00 Scott Mendenhall When I go online. 00:02:03:02 - 00:02:10:09 Bill Billman Hi, my name is Bill Billman. I'm a business analyst with Department of Revenue. 00:02:10:11 - 00:02:35:07 Jerry Nielsen Hello, I'm Jerry Nielsen. I've taught soil science at Montana State University for about 30 years, and I've been on this committee for about 20, and I don't know how much longer I can keep going in my 90s. Well, I'll keep going as long as I can enjoy it. Thank you. 00:02:35:09 - 00:02:47:14 Eric Moore I'm Eric Moore. I'm a we operate a back riding outfit and irrigated farm in Miles city. 00:02:47:16 - 00:03:02:12 Paula Gilbert Hi, I'm Paula Gilbert. I'm in the Billings office today. I apologize for not being in person, but I'm the administrator for the property assessment division. 00:03:02:14 - 00:03:03:12 Scott Mendenhall And. 00:03:03:14 - 00:03:03:22 Amanda Funk Gina. 00:03:04:00 - 00:03:08:12 Scott Mendenhall Are you online? 00:03:08:14 - 00:03:13:12 Gina Stevens Yes, I am. 00:03:13:14 - 00:03:25:23 Gina Stevens Gina Stevens. I'm a Farm Bureau member. Bighorn County, and longtime rancher. 00:03:26:00 - 00:03:38:18 Bryce Kaatz Great. Thank you. And I'm Bryce Kaatz. I'm a compliance executive of the property assessment Division. 00:03:38:20 - 00:03:43:01 Scott Mendenhall Also online there. 00:03:43:03 - 00:03:56:21 Megan Moore Hi. I'm Megan Moore with the legislative Services Division, and I staff the revenue interim Committee. Just. 00:03:56:23 - 00:04:30:15 Scott Mendenhall I'll say a couple things. Just welcome. And on behalf of many of you know, Director Brendan Beatty, who's he's branding cows today and this place quite went. And so it can be here but extends his greetings. And I guess mostly we just want to say thank you for for your contribution and your service. We know time is valuable and take time out to come and do this. 00:04:30:16 - 00:04:58:15 Scott Mendenhall It's very important that I'm not sure. Starting to think about this morning, I meant to ask Amanda how many ag parcels there are in the state of Montana. It's an astounding number. So your work is very important. So we don't take your involvement and your commitment for granted. I just want to say thank you. It's important to talk industry in this state. 00:04:58:16 - 00:05:23:18 Scott Mendenhall So getting it right for our mission of Department of revenue is to be the most citizen oriented tax agency in the country. And we're getting there. And we take that to heart. It's not just not just words on a paper, on a website. We mean that. And the statute says that we appraise all property fairly and 100% of our value. 00:05:23:19 - 00:05:34:03 Scott Mendenhall And so your contribution of serving that for AG is critical. You want to get it right. And we have no. 00:05:34:05 - 00:05:54:03 Scott Mendenhall Incentive or edict from Brendan or anyone else to do anything other than to be absolutely correct. So that's our job. And each one of you have a role in that for us. So welcome. Glad you can be here. And thank you for your help. All I wanted to say. 00:05:54:05 - 00:06:05:01 Amanda Funk Answer your question. There's about approximately 50 million acres in a agricultural classification. Grazing alone makes up about 60% of that. 00:06:05:03 - 00:06:07:00 Scott Mendenhall How many parks? 00:06:07:02 - 00:06:12:07 Amanda Funk I don't know. We don't have to finish our egg classification review yet. 00:06:12:09 - 00:06:14:07 Scott Mendenhall So it's a lot. 00:06:14:08 - 00:06:17:16 Amanda Funk It's a lot. 00:06:17:18 - 00:06:36:10 Amanda Funk I've only heard about when we say 19 counties before in our review clean up. And so I mean, just in the 19 counties, we've touched 40,000 parcels. So we're not done yet. 00:06:36:12 - 00:06:38:23 Amanda Funk A lot of parcels. 00:06:39:00 - 00:07:20:11 Scott Mendenhall Maybe I'll say a little bit more about because we're in a unique posture right now. Follows group is busy. We've had a unusual circumstance with the new property tax laws that were passed that affected 25 and 26 and going forward. So trying to if you're in the realm of and others are heavily involved with trying to administer what is complicated from explicit standpoint tax standpoint, but AG is impacted by the new laws. 00:07:20:13 - 00:07:52:24 Scott Mendenhall They are. And as you go forward and you see your classification, you'll see the impact of that. But one of the illustrations that Brennan has made several times that I think is helpful for us think about, is that in any local tax base, which our job is to appraise property, just to classify it in the phrase it correctly, and then we certify values to the every county by the first of the first Monday of August and then and then counties. 00:07:53:00 - 00:08:23:14 Scott Mendenhall Then they know how can we certify the value of their tax base. They know what one mill will raise. Meanwhile, they've been doing their budgeting figured out under state law what they can, how much they need to raise for their budget. And once we certify a value, they know the value of the one raise. So they do the math and figure out how many mills to levy based on the value of that one mill is on a sort of certification. 00:08:23:15 - 00:08:27:06 Scott Mendenhall But if you think about. 00:08:27:08 - 00:09:04:13 Scott Mendenhall The diversity across Montana of each tax base, what what it's comprised of. We have Missoula that is 80% residential, roughly speaking, that same number in is it southeast? I think it's 2% of their tax base is residential. So we have tax laws that have been passed that are. It's pretty hard to have that impact be the same across the state because there's so much variation. 00:09:04:19 - 00:09:39:22 Scott Mendenhall And so when there's a policy decision made, as there has been to say, in a global way, in a general way, the legislature, the laws that were passed that we want to give some tax relief to one class of property or two classes of property, primary residences and long term rentals. And so the rates that went into effect, 25 and 26 had that goal in mind. 00:09:39:23 - 00:10:06:15 Scott Mendenhall And we're going to give residential taxpayers a break, or we want to reduce what had been an increase in those designated area. Well, if you think about a tax base being that all this is, this is what you have, and if you say over here, we want this particular piece of the pie residential to decrease push in over here. 00:10:06:15 - 00:10:29:12 Scott Mendenhall And it's going to come out just depending on whatever else is in that tax base. And so if you are in a rural community, like many counties are in Montana, the only places that that it can go to, it shifts on to whatever is left in the tax base besides residential and long term rentals. And oftentimes there's an impact on that. 00:10:29:14 - 00:10:54:08 Scott Mendenhall And that's the reason why there was it was a as a necessary result of the lower the tax rate on one, it's going to impact whoever else is left in that whatever other classes are looking at tax base. So that's the why. And I send you know, we've got many experts around the table here just for first quarter about this than I am. 00:10:54:08 - 00:11:23:16 Scott Mendenhall But I my understanding that's why you see an impact because there's no place else to shift to. A local tax base is made up of some town property in a residential area, through commercial properties in a largely AG when there's a policy choice lower the rate for one particular class, it will shift onto whatever else is that? Did I explain that reasonably well? 00:11:23:18 - 00:11:36:24 Scott Mendenhall So that's just an important thing to bear in mind, because I know many of you in your constituencies, you get questions. So why is this happening? That's why it's happening. 00:11:37:01 - 00:11:48:20 Scott Mendenhall I don't want to start the topic for today, but I wanted to I wanted to talk about that because it's hopefully not enough in the room. But here's the thing that helps you to explain. 00:11:48:22 - 00:11:59:03 Amanda Funk Ask you a question. Sure. Do you know the average impact on ag land across the state? 00:11:59:05 - 00:12:07:13 Scott Mendenhall We have a we have a group of economists here, tax policy and in research. 00:12:07:15 - 00:12:17:05 Scott Mendenhall Thank you. I'm already off the agenda here. That's why Robin gave it to me. 00:12:17:07 - 00:12:32:14 Scott Mendenhall I know you're not Eric Dale. Some of you have been involved with some other, other committees where we've had that TPR folks do that. I don't have that right off the top, but I've seen that analysis. I just don't know how we can 00:12:32:16 - 00:12:41:05 Bryce Kaatz 2025 if you just presented it their last meeting a couple of weeks ago. So kind of showing the impact on the other classes of property. 00:12:41:05 - 00:12:56:04 Bryce Kaatz And Scott was explaining it can vary significantly. County play county. But I'm pretty sure he has that breakdown. Have statewide average and county by county basis. That could certainly provide the community of interest. 00:12:56:05 - 00:13:22:13 Cindy Johnson I was just curious because I, I farm in in a corner where four counties come together. So I farm in four counties and my taxes went up minimally in one county and then went down in all the other three. And so I was just curious if, you know, if there was a statewide applicant just on and I realized that commercial and second homes and high value properties went up. 00:13:22:18 - 00:13:25:19 Cindy Johnson But. 00:13:25:21 - 00:13:33:15 Scott Mendenhall I'll get the. 00:13:33:17 - 00:13:37:08 Scott Mendenhall Sorry. 00:13:37:10 - 00:13:37:20 Amanda Funk Here. 00:13:37:21 - 00:13:39:17 Scott Mendenhall You know, what's that? 00:13:39:19 - 00:13:50:05 Amanda Funk I'm hearing your here. So I feel like if you want to talk, you can talk. Scott. 00:13:50:07 - 00:13:55:19 Amanda Funk Okay. Are you ready to move? Okay. 00:13:55:21 - 00:14:14:17 Amanda Funk Again. Welcome, everybody. A part of what the committee does for us is we we provide to you the overview of what our reappraisal is going to look like. Any major. 00:14:14:19 - 00:14:36:14 Amanda Funk Request shifts, changes, anything like that we will present to you. And then what you the committee does is then will recommend to the department any adjustments or suggestions that you may see a better fit moving forward. 00:14:36:16 - 00:14:51:00 Amanda Funk About some of that. If anybody I'm just going to jump right in, get this meeting on the road. Do you have anything else you want to add before I start with the overview? Okay. 00:14:51:02 - 00:15:19:18 Amanda Funk If you want to move to some right into it, then we're going to review the difference between the 2025 appraisal that we're actually currently in. And we're going to look to see what changes moving forward into our next appraisal that will start in 2027. We're going to jump right into what the valuation is going to look like moving into 2027. 00:15:19:20 - 00:15:37:06 Amanda Funk So our commodity for specialty crop we use spring wheat and we use spring weight for a few different subclasses. 00:15:37:08 - 00:15:39:22 Amanda Funk Thank you. 00:15:39:24 - 00:15:43:05 Amanda Funk So we're gonna start with. 00:15:43:07 - 00:16:18:14 Amanda Funk Redoing the spring for a couple different of our subclasses in 2025. That commodity rate was $6.11. We do use a ten year Olympic average, which is also in one of your handouts. So you guys can visually see what that looks like on that ten year Olympic average. The yellow highlighted area just shows the two that we pull out the highest and the lowest that we do pull out to get our commodities. 00:16:18:16 - 00:16:45:10 Amanda Funk Summer fallow is looking like it's going to go up by $0.08, and continuous crop land also is going up, by $0.08 to me that spring wheat, alfalfa is going to move from $124.20 to $125.90. 00:16:45:12 - 00:17:10:05 Amanda Funk Irrigated land will be using the same quantity rates, which makes our minimum value change. The minimum value went from the ones that it should be five. Bill, can you verify it should be 507. 00:17:10:07 - 00:17:15:16 Amanda Funk 507 77 I believe. 00:17:15:18 - 00:17:21:06 Speaker 16 That is correct. Irrigated minimum 507 77. 00:17:21:08 - 00:17:31:15 Amanda Funk So the irrigated minimum is the value that we use. You're getting hayland for irrigated. 00:17:31:16 - 00:17:55:14 Amanda Funk So if the productivity deems less value than that irrigated minimum, it defaults to the irrigated minimum per value. So the value for 2025 was $501.21. And that that is going to be adjusted to $507.77. 00:17:55:16 - 00:18:02:22 Robin Rude And in each of the charts, you can see what the commodity price did. And then at the bottom, the value per acre is going to do so in the summer. 00:18:02:22 - 00:18:07:00 Robin Rude Follow the value per acre is going from $250.61. 00:18:07:00 - 00:18:07:21 Robin Rude To 253. 00:18:07:22 - 00:18:08:20 Robin Rude 89. 00:18:08:21 - 00:18:10:10 Robin Rude For the 2020 second cycle. 00:18:10:12 - 00:18:20:04 Todd Olsen Can you explain that point 4% rate? I, I struggled to see what that where you come up with the 6.4%. 00:18:20:09 - 00:18:33:17 Bryce Kaatz So yeah, the backtrack all of this that we're covering is based on what's currently in statute. So statute says that we'll use a ten year Olympic average. Come up with what the commodity prices are. 00:18:33:18 - 00:18:55:23 Bryce Kaatz And then that's specifically one of the things this committee can evaluate and recommend people change that. We would have to adopt it in a straight. But the commodity price using the ten year Olympic average is in statute. And one of the specific items listed on this committee is to consider a way in and recommend if they think it's not appropriate. 00:18:55:24 - 00:19:26:13 Bryce Kaatz Capitalization rate is also set at a floor of 6.4% in statute. So we can evaluate. And you might remember, we could discuss this more in depth over the past when we had the land classification working group. We don't have data, nor does anyone that we felt comfortable presenting to recommend a different capitalization. Right? Other than using the default floor 6.4%. 00:19:26:14 - 00:19:59:02 Bryce Kaatz This set that sentence statute again, if this committee has some recommendations on Ada sources that could be used to evaluate and come up with a different capitalization rate, we would certainly look into that and take it into consideration. But historically speaking, we haven't had a good data source or rationale to recommend a number different than that 6.4% for that's set in statute. 00:19:59:04 - 00:20:21:06 Bryce Kaatz So that's kind of the history of it. Again, one of those items for you to discuss and consider. And if you have recommendations for us, we're more than happy to look into those. But we've never been able to, within our internal research, come up with a number to present to you to we felt was more appropriate. 00:20:21:08 - 00:20:48:18 Todd Olsen So, if I might add, the committee that worked on this 2009, when did they rose? Quite a while ago. And they spent a lot of time trying to figure out that variable that capitalized. And I think they did a good job. And to my understanding, that's what this advisory committee, that's probably the only number that we can play with. 00:20:48:20 - 00:20:50:20 Todd Olsen Am I correct on that? 00:20:50:22 - 00:21:25:02 Bryce Kaatz Again, like this ten year Olympic average for the commodity prices, if you've got a 15 year average with more appropriate, you could recommend it and we could potentially adopt that by rule. So I'd say the commodity price averaging methodology is one of the main things. And then capitalization rate would be one of the other key components and say probably be able to recommend any type of changes to our base commodity prices, like will you spring wheat because historically that's been dominated crop. 00:21:25:04 - 00:21:48:02 Bryce Kaatz So you could potentially because those aren't set in statute what those base commodities are. So that's something if you felt there was a commodity that better reflected the current conditions in the state of Montana to use as our base. That's something this committee could consider and recommend to us. 00:21:48:04 - 00:22:08:08 Todd Olsen That that might be a topic of discussion. Instead of using spring, we use either alfalfa or winter wheat because there's I know the northeast and wherever there's less spring wheat. But I am not sure with my experience at spring, which the dominant crop in Montana. 00:22:08:10 - 00:22:18:08 Amanda Funk So we do use alfalfa for some of our modules. We do. We use it for irrigated and non irrigated. 00:22:18:10 - 00:22:24:12 Amanda Funk But we we are currently using the spring wheat for everything else. 00:22:24:14 - 00:22:28:07 Todd Olsen Okay. 00:22:28:09 - 00:22:28:19 Scott Mendenhall I'm not. 00:22:28:20 - 00:22:30:01 Scott Mendenhall I'm not. 00:22:30:03 - 00:22:35:04 Scott Mendenhall Just wondering so is it is it just because it's. 00:22:35:04 - 00:22:36:15 Scott Mendenhall Always been this I mean the way they. 00:22:36:15 - 00:22:39:06 Scott Mendenhall Always should be? I guess. 00:22:39:08 - 00:22:42:17 Todd Olsen That's the appropriate metric. 00:22:42:19 - 00:22:49:22 Robin Rude And even the specialty crop is using spring wheat and maybe there should be something different. Use that as well. 00:22:49:24 - 00:23:17:17 Nick Hagerty So I don't know the the history of the prior discussions on the capitalization rate, but based on economic principles, it seems like the like a reasonable thing to use as a benchmark for that would be awesome borrowing for real estate loans. And there are data series on that that you can get from the Minneapolis bed. 00:23:17:19 - 00:23:20:18 Amanda Funk So what was. 00:23:20:20 - 00:23:21:00 Nick Hagerty Yeah. 00:23:21:02 - 00:23:35:19 Nick Hagerty I mean, like the average average interest rates in of ag real estate loans. I was looking at this. 00:23:35:21 - 00:24:05:24 Nick Hagerty Like historically like it was for for a good decade or so. It was around 6.4% covering around there. So that that that probably made sense at the time. And then like in, in the last few years, that spiked up a little bit and now it's down to 6.8. So that if you were looking for I'm not necessarily saying that that needs to change. 00:24:06:00 - 00:24:12:10 Nick Hagerty I'd say if you're looking for data to base that number on that problem, 00:24:12:16 - 00:24:15:19 Robin Rude and what's your source there for 00:24:15:19 - 00:24:16:07 Nick Hagerty the data? 00:24:16:08 - 00:24:17:07 Robin Rude Yeah, 00:24:17:07 - 00:24:27:20 Nick Hagerty the Federal Reserve of Minneapolis. 00:24:27:22 - 00:24:31:09 Nick Hagerty May be collected by the. 00:24:31:11 - 00:24:49:14 Nick Hagerty Kansas City. But like we're in the the Fed's Minneapolis region. So they put out quarterly reports on they have the aggregated survey. 00:24:49:16 - 00:25:20:04 Nick Hagerty So you can you can look at the. Yeah. So they have like average ag interest rates for operating expenses, machinery and real estate. Some real estate seems like. And so I mean I like the the capital capitalization rate should be like the equal to the opportunity cost of borrowing for that kind of asset. So that's what that that's what the real estate interest rate would be. 00:25:20:06 - 00:25:25:12 John Lewis Do you think that's what that was based on originally or you know. 00:25:25:14 - 00:25:33:23 Amanda Funk It was based on the similar source, but not through Mineapolis based out of test. 00:25:34:00 - 00:25:37:04 Jerry Nielsen For for real estate? 00:25:37:06 - 00:25:42:00 Bryce Kaatz Yeah, I think again, that's certainly something for you guys to. 00:25:42:00 - 00:25:42:15 Bryce Kaatz Recommend to. 00:25:42:15 - 00:26:16:22 Bryce Kaatz Us if you think there is something more appropriate or want us to consider maybe something that we necessarily implement for this coming reappraisal, but future ones, you know, probably part of the rationale for sticking with the 6.4% two is probably doesn't provide some predictability. As a producer. You know, that's been a fairly constant in the equation. Whereas if we were changing that capitalization rate every cycle, there'd be a little less predictability for from the producers. 00:26:16:24 - 00:26:48:24 Bryce Kaatz So I think that might have also gone into quite a bit rationale and past of just sticking with that. 6.4. If we didn't have a reliable, great source we were comfortable using and didn't want that number jumping up and down. I mean, probably not in a very too much in a two year cycle, but something to consider. Any of the online members have any thing they want to weigh in on here? 00:26:49:01 - 00:26:53:23 Robin Rude Yeah. Here you go. 00:26:54:00 - 00:27:17:09 Bill Billman No, I just wanted to correct the record price. The the commodities that we use are found in statute 15 seven 201. It does list spring wheat. Spring wheat is used because it can be grown in every county of the state. That's why spring wheat is used. And that's all I had. 00:27:17:11 - 00:27:44:10 Jerry Nielsen I do this is Jerry. I do know that we kept that 6.4, partly because we had a didn't know have a way to get a better number and for the sake of having consistency from year to year and predictability, the committee usually voted to maintain that 6.4. 00:27:44:12 - 00:28:13:13 Cindy Johnson According to the overview, in 2025, there were 5,290,000 acres of spring wheat, 2150 excuse me, 2,000,150 and 890,000 of Durham, which is also a spring and 2,250,000 a winter wheat. So pretty close. 00:28:13:15 - 00:28:20:07 Cindy Johnson But spring. 00:28:20:09 - 00:28:29:22 Bryce Kaatz So I guess just kind of going through these. Just to wrap up, does the committee want to make a recommendation on the capsule stationery? 00:28:29:24 - 00:28:50:09 John Lewis I mean, why it's an unfair number. I think it's fine. I just most of the case where where came from, if it had to do with it, the real estate loan interest rate and makes sense to me. I'm comfortable with that number. 00:28:50:11 - 00:28:57:17 Todd Olsen I share that. 00:28:57:19 - 00:29:05:07 Jerry Nielsen Is the committee going to vote on that or delay that? 00:29:05:09 - 00:29:06:24 Amanda Funk It sounds like they're voting on it now. 00:29:07:00 - 00:29:16:20 Bryce Kaatz Yeah, I guess chair more. You just want to kind of go through these one by one and take a committee vote as we. 00:29:16:22 - 00:29:28:02 Eric Moore I don't have a strong feeling. What's up? I think two years ago we did all our executive action at the end after all the presentations. But I don't know if it matters a whole lot. 00:29:28:04 - 00:29:32:04 Bryce Kaatz Okay. We'll just save everything for the end and do it. 00:29:32:06 - 00:29:37:19 Eric Moore That'd be my preference. I would have to redo something in case a new piece of information comes up. 00:29:37:21 - 00:30:13:10 Amanda Funk Okay, the last piece of our reappraisal is I included our most recent AUM report. So the AUM, the carrying capacity is decreasing by 1 or 2027 cycle. Those going to move from 22 to 21 as a requirement for somebody, someone to be classified under the agricultural land classification for property tax purposes. 00:30:13:12 - 00:30:22:06 Amanda Funk And then if you go beyond that report. 00:30:22:08 - 00:30:56:17 Amanda Funk And I think this kind of is going to go into the department's discussion. But before we step on into the committee's discussion, I wanted to try to give you an overview of what we've been up to for the through our current Agricultural Land classification manual. No, no big changes, just kind of cleaning up some language, you know, making it a little bit easier for taxpayers and everybody to read. 00:30:56:19 - 00:31:07:23 Amanda Funk The big thing that we've been working on is the length and cleanup project statewide. So what that means is. 00:31:08:00 - 00:31:08:10 Amanda Funk I don't. 00:31:08:15 - 00:31:37:01 Amanda Funk Know how many years, but people are exchanging, you know, selling land, taking on more land, splitting land. There's very many different avenues as where like a new agricultural land application is required or proof of those requirements to to maintain that land classification is required and some of it has fell through the cracks. Some of it is just one of those things. 00:31:37:03 - 00:32:12:22 Amanda Funk So we are bill and I are going to be working on a project where we're going to talk to you by county and reviewing any property that is less than 160 acres, that is currently having a agricultural land classification without an application on file, we need to know if they're going to find add operation or not. Like I said earlier, I think we've gone through 19-20 of the 56 counties or something like that, and we've touched 40,000 individual parcels out of that, though, we were able to clean that up. 00:32:12:23 - 00:32:16:04 Amanda Funk And I want to say. 00:32:16:06 - 00:32:39:13 Amanda Funk 5000 parcels received letters, and if there were multiple parcels, it would receive one letter under one ownership. About 5000 parcels are going into review. So out of 40,000, that's pretty good. I feel that people are actually sitting in bona fide operations, and that is a huge undertaking project that we're trying to clean up. 00:32:39:15 - 00:32:41:10 Robin Rude And just because they're getting a letter that. 00:32:41:10 - 00:32:41:20 Robin Rude Says. 00:32:41:20 - 00:33:00:19 Robin Rude Hey, you've got this 80 acre parcel that we need an application on file for, it doesn't mean we're trying to change the classification. It just might mean that this parcel is not contiguous with your main operation. So we have to have an application on both of this parcel. It'll be easy to fill out the application and retain the qualification on that. 00:33:01:00 - 00:33:21:24 Robin Rude But but legally we have to have that application on file for anything that's under 160 acres. So some of your neighbors may have been getting some of these letters saying they had to reapply. It's not because we think you're not still in a, it's just because the requirement is that that parcel needs an application on file. So any questions whatsoever. 00:33:22:02 - 00:33:28:02 Robin Rude Yeah. Give us a call and we can help walk them through that process. 00:33:28:04 - 00:33:37:00 Amanda Funk Any questions regarding the cleanup. And I mean any letters received or anything like that. 00:33:37:02 - 00:33:46:06 Todd Olsen So is this have anything to do with the two recommendations that you got us thinking about when you sent that email out? 00:33:46:08 - 00:34:32:18 Amanda Funk No, sir. No. This project was something that has been coming that is. Needed to be done. I mean, I mean, for. Every parcel That. Shouldn't be in agriculture. Classification that's currently is that is being pushed onto another part for so for every tax dollars that's not being paid here is being picked up over here. But like I said, most of them are actual bona fide AG operations. We just legally need to have that application file, and it's just a matter of filling it out, brining it in so we can get it on there and check the boxes as it is there. 00:34:32:20 - 00:35:14:04 Robin Rude We also recently went through a legislative audit on exemptions, and the exemption is where this particular application sits. And so in light of we're trying to get ahead of the ball and before we get an audit on agricultural applications, we wanted to be sure that we have everything in the system. And any missing ones were identified and got attached to the record as well. So part of it was sparked because of the recent legislative audit we already had on other types of exemptions. So we wanted to make sure that we had this part cleaned up as well. 00:35:14:06 - 00:35:24:21 Amanda Funk There's no questions on that. We are going to move into the committee consideration and recommendation. The department is requesting recommendations. 00:35:24:21 - 00:35:25:22 Amanda Funk From the committee. 00:35:25:22 - 00:35:29:21 Amanda Funk To establish a consistent and predictable policy for. 00:35:29:21 - 00:35:30:13 Amanda Funk Determining the. 00:35:30:15 - 00:35:42:05 Amanda Funk Animal. Unit months, to improve stability and fairness for the both, for both the department and taxpayers. What that means is current policy. 00:35:42:06 - 00:35:43:11 Amanda Funk Current process. 00:35:43:12 - 00:36:15:06 Amanda Funk Is every two years we receive a report stating what our current AUM requirement is for somebody to be at operation under grazing. I believe now the minimum requirement about 120 acres of dry land grant dryland grazing to meet our annual requirement every two years. That changes what the what the rancher is doing isn't changing. Our requirement is changing every two years. 00:36:15:10 - 00:36:25:08 Amanda Funk So what we're asking is recommendations from you guys to how to create a more stable. 00:36:25:10 - 00:36:49:22 Amanda Funk Way of handling and establishing the statement requirement. Two ways of looking at that is if you let's say you have somebody brand new, they can only afford just starting out at high school. They get their 80 acres, they're doing all the things they're doing, you know, they're even irrigating it. They barely come in. They meet the 22 animal units two years down the road. 00:36:49:23 - 00:37:13:16 Amanda Funk Animal unit, the cattle prices tank AUM requirement goes through roof because it is based on cattle. Ten year Olympic average of cattle prices right now, as long as those cattle prices are going to go up, or a requirements going to continue to go down. So there won't be any really huge issue. But historically, if you like, it went from 30 to 31, 23 to 25 back down to 22. 00:37:13:17 - 00:37:34:10 Amanda Funk So whoever qualified in 2021 and 22 no longer qualifies in 23-24, even though they're not doing anything different with the land. But then they qualify it again in 25 and 26. So every two years, that's that's a lot on both sides, right? That's a lot on the department and a lot on the on the 00:37:34:12 - 00:38:14:03 Robin Rude and it used to not be such a big deal with the six year cycle because we have that same AUM calculation for six years. But now that the cycle is every two years, that can get a little crazy. And like Amanda said, technically if they qualified in 21-22, they should have received a new application and then disqualified for the following year if they came in at 23 or 24 AUMs, because the minimum was 25 and the 23-24 tax year. And so we're just trying to eliminate that. We're trying to figure out how to make it more smooth and where we don't have that volatility. 00:38:14:05 - 00:39:08:05 Todd Olsen May I comment on this is this is why I wanted to be here in person so I could portray this message. The department looks at it as a money end of it. As a rancher or conservationist. It's about the land. It ain't have nothing to do with the money. If you qualify for ag use and you don't change your use. We can't control the markets, we can't control the weather. So every two years, just because one of those things changed doesn't mean you're doing what the land needs different. So if you're if you're going to throw money at it or into the equation, we're either going to over graze or change use. I mean that's not good for the land. 00:39:08:07 - 00:39:51:16 Todd Olsen It might be good for tax revenue, but it's not good for the land. And what does Montana do? Tries to protect the land. So I think we need to think about that more than every two years. Do the market thing to adjust the answer going to stay the same, especially if you do the ten year average, because you're not going to have ten years ago and you're not going to have ten years of flood. So you take that Olympic average. This is what the land will produce. If you qualify during that ten year period, you shouldn't have to reapply just because of the market changes. Thank you. 00:39:51:18 - 00:39:54:14 Robin Rude Other thoughts on that? 00:39:54:16 - 00:40:11:20 Nick Hagerty It seems like the. Problem is in the statute is that the statute spells out this $1,500 threshold is in terms of dollar amounts rather than in terms of AUM. So. 00:40:11:22 - 00:40:39:07 Robin Rude For qualifications on every crop other than grazing, it's a $1,500 minimum, which is pretty easy to maintain. The AUM, though, is based on size of the cow, the amount they eat and you know, the prices and all of these types of things. So that is where that fluctuates a little bit more. And I agree with you. Once you're in your qualifying, you're still using it for that. 00:40:39:09 - 00:40:43:00 Todd Olsen What'Unless the changed ownership to change the use you should be good to go. 00:40:43:00 - 00:41:08:12 Amanda Funk Yeah. And that's how we view all the other subclasses that we have. So if you are in dry land, if you're in continuously crop, if you're in all those things, we're not changing your classification just because the crop market has changed, but because grazing land is looked at a little bit different, because it's looked at what the land can state and what the support without damage. 00:41:08:12 - 00:41:39:21 Amanda Funk Right. So because we're based on we're we're held to that $1,500 across the board, including grazing. We have to convert the animal unit to a 15 to a dollar amount to that $1,500. So that's where the ten year Olympic average came up. If you look through the report, the sale pricing is converts that ten year Olympic dollar amount $1,500 to to an animal. 00:41:39:23 - 00:41:57:08 Amanda Funk So he's like, okay, based on my information, that's how many units cow equals at $1,500. That's where we're asking the committee if you have any suggestions to invest less. 00:41:57:10 - 00:42:07:24 Bryce Kaatz Well, I want to be clear on a statewide basis, we're not every two years saying, okay, it's 30 and going and looking at every one of those grazing is under 30 and getting plowed. 00:42:08:05 - 00:42:42:06 Bryce Kaatz It's more so if you happen to apply to us on a year, that's 28 is the requirement, and you go and got 25, they're going to get the night in that year. Now, if it drops to 24 in the next cycle, you would have to know to reapply that you now qualify. So what we're really looking for is a number that's more steady so that we're not hay qualified this year, because the calculation of the ten year Olympic average came in at 28. 00:42:42:08 - 00:43:12:24 Bryce Kaatz Happens a year, lend support 25 and then four years from now when it drops to 21, because cattle prices are good, that person would be able to come and reapply to us and would not qualify. So we're not proactively kicking people out each cycle. It's just if you happen to apply in a year where it's high and your soil says you can only support 25 and the number is 28 for that year, you're going to get denied. 00:43:12:24 - 00:43:50:15 Bryce Kaatz And then if it drops the next cycle, you could come and reapply to us and you would get granted. So we're more looking for a like a four base number that stays consistent that we would use to evaluate those applications. So we're not in this situation where just because the year you applied and then relying on the landowner to know that these numbers change cycle in the check and say, oh, now it's 23, now I qualify, we don't have really track and say, okay, this this individual like eight years ago and now their land meets the qualification. 00:43:50:16 - 00:44:04:16 Bryce Kaatz So the more your point is if it's actively devoted to an agricultural use, kind of maybe establishing a floor or something that is more consistent in making that determination. 00:44:04:18 - 00:44:34:03 John Lewis Well, in my mind, there's a lot of these 40, 48 acre parcels that can't sustain 21 he lands, but they're they're using that as an agricultural use. They should qualify. You know, that's what we struggled with in that land classification working. I don't know how you do it. And I didn't know that's what we're here to do. I guess I thought we were to look at these numbers, but there's that. 00:44:34:05 - 00:44:56:13 Amanda Funk These are just suggestions that we came up with to start the discussion amongst the committee. These are not options. These are just suggestions that you guys can review that we gave. Mr. Olson provided another suggestion. Just you know, once you're in, you're in. 00:44:56:15 - 00:44:58:16 John Lewis Well unless unless. 00:44:58:18 - 00:44:59:24 Amanda Funk Yeah. 00:45:00:01 - 00:45:01:09 Jerry Nielsen For change views. 00:45:01:11 - 00:45:10:24 Amanda Funk So he he created another suggestion. So these were just to get the discussion going amongst the committee. 00:45:11:01 - 00:45:47:08 Nick Hagerty So just to clarify when after after someone receives a agricultural designation is that revisited at some point. So it's like how long if there's a change in ownership or a split it would be we would send that person then new owner saying, hey, this is receiving a classification. He was a new owner to reapply and demonstrate that you're still actively devoting that property to an agricultural use to continue receiving that classification in the future. 00:45:47:10 - 00:45:57:18 Nick Hagerty Outside of that, unless we notice, obviously, if it's a split or subdivision that's going to trigger you, otherwise it's not. 00:45:57:19 - 00:46:17:04 Bryce Kaatz There is no requirement for periodic reapplication. That's one of the things that the Land Classification Working Group also considered making a recommendation on is showing or some sort of periodic replication so that you don't get someone who uses it that first year. 00:46:17:05 - 00:46:50:11 Bryce Kaatz They acquire it, they get the classification and then remove their agricultural use and continues it. But usually it's just there's a split or the ownership transfer would trigger that new owner having to apply. But other than that, unless we happen to notice that it's no longer used, I think that's the difficulty in the grazing land is because it's a harder thing to verify, least from the past. 00:46:50:13 - 00:46:57:09 Bryce Kaatz It comes out for a review and cows out there for the week that we come and review the property and hold them. 00:46:57:11 - 00:47:11:04 John Lewis So some of those properties are only capable of carrying, and if they're using it for that, I think there justifies there being ag land. I don't know how you 00:47:11:04 - 00:47:25:15 Todd Olsen but John, I think that goes back to my point. I mean, if you qualify in protecting the land, the money should, shouldn't dictate that. And I have a hard time with that money because I'm doing it right. 00:47:25:16 - 00:47:32:09 Todd Olsen And you're you're a steward of the land. That's what that's what we do. 00:47:32:11 - 00:47:58:16 John Lewis I think even one of the larger problems in my mind is that the small acreage user, but it's the big, big ranches that are going out production, you know, they're just we all see it in all our counties, especially in Fergus County. Some of these were the lands being bought up by people were basically hunting or for recreation, and it's being taken out of use entirely. 00:47:58:20 - 00:48:09:03 John Lewis And those are huge acreages that are cost in the state of Montana, a lot of money because they're still paying an aggregate and they're the ones that should. 00:48:09:05 - 00:48:10:20 Cindy Johnson Yeah, exactly. 00:48:10:21 - 00:48:11:20 Todd Olsen I agree a good point. 00:48:11:21 - 00:48:47:12 Bryce Kaatz I think everyone's aware that you served on the classification working group over the last, did bring a number of bills forward. Passed 2025 session. As of the result of that work, they didn't go anywhere for a number of both reasons. I don't think we have any intent as an agency to bring any of those bills forward. Again, I don't know if any of it will choose, and I'm sure this topic will come up again. 00:48:47:14 - 00:48:50:09 Bryce Kaatz With large. 00:48:50:11 - 00:49:00:08 John Lewis I mean, I realize that's not why we're doing this. It's easy to get off because it does. It eats at me and I think it does. 00:49:00:10 - 00:49:03:02 Cindy Johnson I agree with John. I grew. 00:49:03:02 - 00:49:22:10 Cindy Johnson Up on the powder River, and when you're right on the river, you can put a lot more critters on a piece of land. But when the father you get from the rivers, the fewer cattle you can run, and you can have 40,000 acres and have the same size herd as somebody who has 5000 acres, depending on where you're at. 00:49:22:12 - 00:49:35:05 Cindy Johnson Absolutely. You know, and like Todd said, that's what we need to consider. How are you really using the land and are you taking good care of it? 00:49:35:07 - 00:49:38:03 Cindy Johnson Not the value of a career. 00:49:38:05 - 00:50:05:16 Amanda Funk And I think a portion of how we are able to verify that somebody is actually using the bona fide add operation is by requiring the minimum of $1,500 gross income to be submitted, right. If you are a bona fide ag operation, you're going to have documentations for your CPA, for your taxes, stuff like that. So we outside. 00:50:05:16 - 00:50:06:13 Amanda Funk Of grazing. 00:50:06:14 - 00:50:40:02 Amanda Funk That's one of the requirements. When they apply, they can't just attest to guess I'm a steward of the land. Yes, I'm a steward of the land. And here's the documentation probing that I am a steward of the land. We don't get that with grazing. So we hold again. We come back to that $1,500. If the committee has another suggestion of how we come up with an eight one, because again, if you have somebody on five acres who throws a cow out there and go, I'm a grazer, I'm a rancher giving that had classification, that's five acres. 00:50:40:02 - 00:50:57:01 Amanda Funk But, you know, we have to we have to have some sort of boundaries so people don't take advantage of classification. Yeah. We have to have something in place that says you need to meet these requirements, you know, help us help you. 00:50:57:03 - 00:50:59:24 Robin Rude Which was why back in 2009. This whole. 00:51:00:00 - 00:51:00:18 Robin Rude AUM came. 00:51:00:18 - 00:51:03:15 Robin Rude Into play because before that it was even. 00:51:03:15 - 00:51:04:11 Robin Rude For grazing. It was one. 00:51:04:11 - 00:51:05:01 Robin Rude Thousand 500. 00:51:05:02 - 00:51:06:01 Robin Rude Dollars and. 00:51:06:01 - 00:51:07:19 Robin Rude You could submit your cell received. 00:51:07:19 - 00:51:10:01 Robin Rude From the stockyard, whatever. 00:51:10:01 - 00:51:10:13 Robin Rude You had. 00:51:10:14 - 00:51:10:22 Robin Rude To get. 00:51:10:22 - 00:51:16:10 Robin Rude Your $59, and then you followed by whether that was a Catholic you bought from the neighbor. 00:51:16:10 - 00:51:32:15 Robin Rude And then sold or whatever the case may be. So back in 2009, when this changed, we did send applications out to everybody that was grazing, because those classifications that that the way that we determine eligibility changed at that time, 00:51:32:17 - 00:51:41:23 Bryce Kaatz I will, I guess, just point out, as mentioned, unlike some of the things into this committee's purview, that we can just adopt by rule. 00:51:42:03 - 00:52:03:22 Bryce Kaatz This is all very specific in statute. So this would actually take a change in the law to to make a change to how this is currently working. And like some of this other stuff that we can just adopt based on your recommendations, the new administrative rule, this particular topic would take a statutory change. And 00:52:03:24 - 00:52:06:08 Nick Hagerty can I go back and clarify, like. 00:52:06:10 - 00:52:14:19 Nick Hagerty What you're saying, it sounded like we do have the system that we suggested of like once you're in, you're in, right? 00:52:14:21 - 00:52:15:07 Bryce Kaatz Yeah. 00:52:15:13 - 00:52:16:10 Robin Rude For the most part, 00:52:16:16 - 00:52:31:04 Bryce Kaatz we are not actively looking at how that number changes each year and then looking at grazing parcels and saying, oh, sorry, you were at 23, which qualified last cycle. Now the requirement is 25 for kicking out. 00:52:31:04 - 00:52:36:09 Nick Hagerty So we're talking about situations where there's a change in ownership or in land use 00:52:36:11 - 00:52:38:00 Cindy Johnson or. 00:52:38:02 - 00:52:38:23 Cindy Johnson Sorry. 00:52:39:00 - 00:52:49:07 Todd Olsen The cycles of change used to be six years. Now it's two years. So every two years you got or whatever. 00:52:49:09 - 00:52:50:19 Amanda Funk Right. And if you're. 00:52:50:21 - 00:53:00:12 Todd Olsen A burden on the producer, I'm not sure it keeps it more current for the department to keep things up to up to snuff. 00:53:00:12 - 00:53:09:08 Robin Rude But but there is no current requirement that a producer has to reapply. There's no current requirement of that. 00:53:09:10 - 00:53:10:15 Todd Olsen I didn't know that. 00:53:10:17 - 00:53:11:20 Amanda Funk If you're a producer. 00:53:11:20 - 00:53:14:00 Amanda Funk Who a. Grazer and. 00:53:14:00 - 00:53:14:23 Amanda Funk You applied in. 00:53:14:24 - 00:53:31:11 Amanda Funk 2023 or 24 when the animal requirement was 25. And those soil data that we use. From the NRCS soil survey states that your land is only capable of maintaining 21 animal units, you would not be. 00:53:31:11 - 00:53:32:06 Amanda Funk Able to qualify. 00:53:32:06 - 00:53:50:13 Amanda Funk In that cycle. But then let's say in two years down the road, when those requirements drops 21, there's nothing there to go back to that producer two years prior and go, hey, you're going to qualify now. Please buy. 00:53:50:15 - 00:53:54:20 Todd Olsen Education. You can stay informed. You want to. 00:53:54:22 - 00:53:57:02 Bryce Kaatz Have anything you want to add. 00:53:57:04 - 00:53:59:08 Bryce Kaatz Are sure we're. 00:53:59:08 - 00:53:59:20 Bryce Kaatz Including. 00:53:59:20 - 00:54:00:06 Bryce Kaatz You guys. 00:54:00:06 - 00:54:02:12 Bryce Kaatz In the conversation. 00:54:02:14 - 00:54:08:23 Bryce Kaatz Provide input discussion on. 00:54:09:00 - 00:54:09:23 Scott Mendenhall Okay. 00:54:10:00 - 00:54:13:21 Scott Mendenhall To be fair. The project you're. 00:54:13:21 - 00:54:16:12 Scott Mendenhall Doing we got 1919 counties under so. 00:54:16:12 - 00:54:19:11 Scott Mendenhall Far as you're going through and. 00:54:19:13 - 00:54:20:04 Scott Mendenhall And looking. 00:54:20:04 - 00:54:21:10 Scott Mendenhall For places. 00:54:21:10 - 00:54:44:18 Scott Mendenhall That. Have the AG designation that there's no on file. And right now we're sending out 5000 letters saying, hey, you don't have an application on it, so assign so that we don't require a reapply. But as part of this cleanup sort of chewing up, make sure that things are accurate. People are getting caught up in that process of having to apply. 00:54:44:20 - 00:54:46:08 Bryce Kaatz That's right. 00:54:46:10 - 00:54:47:12 Robin Rude Luckily. 00:54:47:14 - 00:54:57:15 Robin Rude And luckily the AUM are the lowest as they've ever been. And so those that are getting those letters that have to reapply on certain parcels and have that benefit. 00:54:57:16 - 00:55:01:00 Todd Olsen Should be a good time to avoid. Yeah, right. 00:55:01:02 - 00:55:02:15 Robin Rude So it's really. 00:55:02:15 - 00:55:05:16 Todd Olsen Just keep it that way. 00:55:05:18 - 00:55:10:11 Robin Rude Cleaning up. And that could be a recommendation of you. You want to keep it. 00:55:10:13 - 00:55:12:21 Bryce Kaatz We keep prices. 00:55:12:23 - 00:55:49:01 Amanda Funk Yeah I can't recommend it. And those were some of the going back to the two of the suggestions for your guys's discussion were some recommendations of essentially keeping it a static or a floor level to create that kind of like an even keel. Right? So we're not doing this, yo, yo. So somebody who may have not qualified today qualify as next year, or somebody who qualifies this year, vice versa, or it's a yo yo effect that we're trying to get away from. 00:55:49:03 - 00:55:59:07 Todd Olsen Okay, to get rid of the yo yo effect, go back to the soil tests and the ten year Olympic average on what that. 00:55:59:09 - 00:56:06:03 Todd Olsen Parcel will maintain as AUM. And that's it. That's what you got to do. 00:56:06:04 - 00:56:09:23 Amanda Funk We do currently use soil data. 00:56:10:00 - 00:56:17:12 Todd Olsen So the only thing that changes the AUM is their market price. I'm up on that because the land. 00:56:17:13 - 00:56:17:23 Todd Olsen And again. 00:56:18:04 - 00:56:18:15 Bryce Kaatz All so. 00:56:18:15 - 00:56:20:17 Bryce Kaatz Much it's all tied to the 1500. 00:56:20:17 - 00:56:21:20 Bryce Kaatz Dollars in gross income. 00:56:21:20 - 00:56:25:12 Bryce Kaatz That's in statute that you have to make meet in. 00:56:25:12 - 00:56:31:17 Bryce Kaatz Order to qualify. The. Issue with the grazing. Land. In particular. And that 15. Hundred dollars. 00:56:31:18 - 00:56:36:06 Bryce Kaatz Is to get to the point of verification. 00:56:36:08 - 00:56:37:01 Bryce Kaatz If it's just. 00:56:37:01 - 00:56:51:04 Bryce Kaatz Submitting a receipt, I could go buy a cow and put it in my field for a day, and I go sell that cow and show. Here's my $1,500 in income when I'm not actually devoting that property to use. 00:56:51:05 - 00:56:53:04 Bryce Kaatz So that's kind of where this. 00:56:53:06 - 00:56:54:19 Todd Olsen There's going to be. Checks and balances. 00:56:54:21 - 00:56:55:14 Todd Olsen Comes in with. 00:56:55:20 - 00:56:56:03 Bryce Kaatz A real. 00:56:56:08 - 00:57:18:18 Bryce Kaatz Carrying capacity having to meet that. But because of the two year cycle and a ten year average and the the required calculation from MSU that makes the equivalent of to get that $1500. Why? This is somewhat of an issue. 00:57:18:20 - 00:57:19:08 Nick Hagerty So I. 00:57:19:08 - 00:58:47:19 Nick Hagerty Had a suggestion, which is you could. So I mean, if it seems like this is prompted by the switch from the six year cycle, so, so. We. We could get back to it basically the six year cycle, by using a rule that says like take the take the lowest AUM of the of the past six years, like the last three seconds. So so the 21 if, if, if, if prices go back down and 21 remains the floor for for another six years, then, then then we don't get the, the ratcheting up, you know, for a little while. But so it doesn't make it it doesn't like make it permanent like option one. But it's a lot simpler than option two. 00:58:47:21 - 00:59:18:20 Robin Rude Is there any we've talked a lot about where the number comes from and why, but is there any further discussion that the committee wants to explore about? If you're legitimately using it for an ag purpose and you have a small acreage, but and you don't meet the requirement, is there any adjustment that you're thinking is necessary or you're wanting to make, or are you satisfied with those decisions of the past as far as the calculation? 00:59:18:20 - 00:59:21:06 Robin Rude And. 00:59:21:08 - 00:59:24:20 Cindy Johnson So, John, you remember a couple of years ago, the. 00:59:25:01 - 00:59:32:17 Cindy Johnson Young man from Fergus County area who had 80 acres. 00:59:32:19 - 00:59:36:00 John Lewis And he called it online every. 00:59:36:02 - 00:59:42:12 Cindy Johnson Yeah, yeah. But his concern was that his land didn't qualify because it didn't have. 00:59:42:13 - 00:59:45:01 John Lewis It didn't have the carrying capacity. 00:59:45:03 - 00:59:51:09 Cindy Johnson Because he was feeding anybody was grazing and feeding cattle on that 8o achres. Right. 00:59:51:10 - 00:59:53:01 John Lewis Right. 00:59:53:03 - 00:59:55:14 Cindy Johnson And to me that's agriculture. 00:59:55:16 - 00:59:56:18 John Lewis Yeah. 00:59:56:20 - 01:00:02:09 Cindy Johnson You know, and so is there a fix for people like that? Well, it depends. 01:00:02:09 - 01:00:02:24 John Lewis On what. 01:00:03:00 - 01:00:03:10 Amanda Funk So if. 01:00:03:10 - 01:00:12:16 Amanda Funk He is paying the land first and then after grazing, or is he splitting the land and hanging for grazing part, I think I think the first case is. 01:00:12:18 - 01:00:23:03 John Lewis Yeah, I honestly don't even remember that hate land, but that made me did. I just thought he was grazing it. Really. The land was not capable of carrying 25. 01:00:23:05 - 01:00:24:07 Amanda Funk Who called it a few times. 01:00:24:08 - 01:00:25:19 John Lewis Yeah, probably, I can't remember. 01:00:25:20 - 01:00:56:18 Amanda Funk He was. He worked for the extension office, so he actually did qualify. He went and got site personal, site specific, important information from a range specialist because he had underground springs, his land was was able to produce enough forage to meet the animal unit months. It was just a matter of him doing the legwork to get to get us that report. 01:00:56:20 - 01:01:19:22 Amanda Funk But in a case where somebody is paying the land and then after grazing, we would look at that land as producing hay. And nine times out of ten, if they can produce enough, hey, they're going to qualify after grazing is a it's a typical management practice that most a lot of the producers will do once we're done with their final cutting. 01:01:19:22 - 01:01:27:09 Amanda Funk So we would look at that as a hay production, not a grazing direction okay. 01:01:27:11 - 01:01:43:03 John Lewis I mean, I wish I had a simple solution, but there is no I know. And then those guys with the small images are the ones that really struggle to requirements. I don't know, I don't know what you do. You're welcome. 01:01:43:06 - 01:01:49:10 Amanda Funk When we say, I mean, on the average it's 120 acres to qualify right now without irrigation. 01:01:49:16 - 01:02:15:24 John Lewis Yeah. But you know, there are there are 40 acre parcels that grades cattle that in my mind should qualify if they're leasing, if they're leasing it out and their neighbors around 10 cows on there, I mean, they're using it for that purpose. They should qualify. But I know there's a lot of loopholes. And people like you say you're taking 2 cows to the market. 01:02:16:01 - 01:02:22:10 John Lewis So not a simple not a simple solution I'm sure. 01:02:22:12 - 01:02:27:21 Cindy Johnson Is the requirement $1,500 period. Or is it $1,500 per acre? 01:02:27:23 - 01:02:30:02 Amanda Funk $1,500 period. 01:02:30:04 - 01:02:33:04 Cindy Johnson So that that is one of the problems, 01:02:33:05 - 01:02:33:10 Cindy Johnson right? 01:02:33:11 - 01:02:35:15 John Lewis Yeah, I know, I can write you a check. 01:02:35:20 - 01:02:36:11 Cindy Johnson Exactly. 01:02:36:12 - 01:02:38:14 John Lewis And you can pay me back under the table. 01:02:38:16 - 01:02:40:23 Cindy Johnson And that's what happens in small acreages. 01:02:40:24 - 01:02:43:12 John Lewis Yeah, that was definitely. 01:02:43:14 - 01:03:04:22 Amanda Funk The check. Doesn't work with grazing. Anything that requires grazing. We look at the animal unit. So lease or sale of the cattle. All that said, and we do not take into consideration because we're looking to see if the link and sustain that minimum animal unit months first when we're talking grazing. 01:03:04:24 - 01:03:18:16 John Lewis So if you look at this, one of these examples on grazing land, I think it was two one units per acre or something like that. 01:03:18:18 - 01:03:21:07 Robin Rude Is the average. 01:03:21:09 - 01:03:23:13 Amanda Funk That's the average. 01:03:23:15 - 01:03:37:04 John Lewis Yeah. So okay, so maybe that's, that's something you could use. If somebody has ten acres they have to show basically 2.1 units could be raised. 01:03:37:06 - 01:03:53:06 John Lewis Which is all that ten acres is capable of carrying instead of making them graze. 21 and then, you know, harming the land, they have to do that. 01:03:53:07 - 01:03:54:03 Tiffany Pouliot-Harris Well, no. 01:03:54:04 - 01:04:23:01 Amanda Funk So we ...okay. So we require the 21 animal unit months moving forward in 2027, only 21. If the data that we receive from the NRC Watts will survey so that your land is not capable of maintaining 21 animals once you do not qualify. Whether you decide to over graze or under grades, that is you as the producer, as the manager of the land, that is your decision. 01:04:23:03 - 01:04:52:05 Amanda Funk We look at your required to carry this amount. The data that we have says that your land cannot carry that amount. So unless you provide site specific or pertinent information from a range specialist or whatnot to show us, otherwise you won't qualiffy it. So it goes from carrying capacity versus stocking rate. We look at carrying capacity with a sustained versus not what you're actually caring. 01:04:52:07 - 01:05:02:10 Todd Olsen So there is there is avenues for those people to prove that they can do this. And not just the point blank. Your average. 01:05:02:12 - 01:05:22:01 Amanda Funk Right, like Mr. Smith was like he knew his land would follow greatly. I mean, he worked for the extension office too, but he was adding, he was like, no, I know my land means the required carrying capacity. And so he took the extra steps to get that specialist report to show that. 01:05:22:03 - 01:05:26:23 Todd Olsen I was in. 01:05:27:00 - 01:05:52:18 John Lewis So I, I think he could beat this source to death. That's probably the way you're going to have to leave that in my mind, leave it at the 21 and give the people that have the smaller acreage the opportunity to to prove otherwise. I yes, and it's a lot of footwork. I guess it's just have to do. 01:05:52:20 - 01:06:06:24 Amanda Funk Are you suggesting leave it at a static 21 or, well, leaving it at a 21 for the cycle? And then let's say the market tanks that hypothetically shoots with the route back to 25. 01:06:07:04 - 01:06:15:14 John Lewis Well, I like to leave it static 21 for just to simplify it. 01:06:15:16 - 01:06:21:11 Amanda Funk Very hypothetical. 01:06:21:13 - 01:06:30:07 Todd Olsen You want to simplify it and make it easier for producers and the department. We got to have a we got to have a number of distinctive. 01:06:30:09 - 01:06:36:08 Amanda Funk That would also take the money out of it. 01:06:36:10 - 01:06:46:07 Todd Olsen If it's a land description it says it's and produced this much. That's the number. 01:06:46:09 - 01:06:51:20 Amanda Funk I feel that we wouldn't have to have a base number though, to start with. Again. 01:06:51:20 - 01:06:59:20 Todd Olsen This is our Olympic average. What's what's his state. We've been keeping track of this grazing. 01:06:59:22 - 01:07:12:24 Robin Rude So from 2009 it was 30. It was 31 for six years. Then it dropped to 23, 25, 22, 21, 21 is going to be the lowest that's ever been. 01:07:13:01 - 01:07:25:13 Todd Olsen But that's that's how that's market numbers. What's what's next? Say that when we were talking about this is only what year that can produce for a. 01:07:25:16 - 01:07:34:02 Robin Rude Statewide average is 0.1 per acre. 01:07:34:04 - 01:07:40:07 Todd Olsen How long has that number been there through the. 01:07:40:09 - 01:07:45:24 Bryce Kaatz Soil survey. So whenever they were done they don't get updated all that frequently. 01:07:46:00 - 01:08:03:05 Todd Olsen Okay. So maybe we need to run run our our little algorithm or whatever you formula off of what the land can actually produce and not worry about all of a sudden market. 01:08:03:06 - 01:08:12:20 Amanda Funk So if we look at what the land can actually produce, and let's say your parcel can only sustain according to the NRCS. 01:08:12:22 - 01:08:33:21 Amanda Funk Point to one of an animal that's an entire cow went to one. Where do we that's that's going to roll into effect like how we value and other thing else. But at what point do we say. 01:08:33:23 - 01:08:44:01 Amanda Funk Where's the base, where's where's the foundation is? You're saying if your land can sustain 0.21 you qualify. And anything above that is. 01:08:44:02 - 01:08:48:18 Todd Olsen Money in your pocket because you're a good producer. 01:08:48:20 - 01:08:52:00 Todd Olsen Doesn't have to go to the stage. 01:08:52:02 - 01:08:54:01 Robin Rude I mean. 01:08:54:02 - 01:08:58:04 Todd Olsen .21 times. What's our what's our 120 acres? 01:08:58:05 - 01:09:10:02 Robin Rude Well, let's just say you have 80 acres and you're productivity is 21 and you're running 16 cows. Then what you're saying is that 16 cows should qualify as opposed to 21. 01:09:10:02 - 01:09:11:16 Todd Olsen One, right? Yeah, I agree, I. 01:09:11:16 - 01:09:11:21 Todd Olsen Would. 01:09:12:01 - 01:09:13:02 Todd Olsen Say yes. 01:09:13:03 - 01:09:21:23 Robin Rude That does take the money out but it doesn't protect. 01:09:22:00 - 01:09:28:21 Scott Mendenhall I'll call on the Chairman Moore here for your input. 01:09:28:23 - 01:09:30:04 Scott Mendenhall Statute says 15. 01:09:30:04 - 01:09:31:19 Scott Mendenhall Hundred bucks. 01:09:31:21 - 01:10:40:17 Scott Mendenhall There's got to be a nexus between that number that's in law and grazing land that doesn't have a receipt. So I'm wondering, from an equalizer standpoint, the legal the legal challenge, someone would say, well, I got it and I didn't get it. He did. What's the. What's the department's rationale for deciding that over here you're. Requiring. The statute. Says. It's dollars. And over here, where we're qualifying based on land productivity, is there an equalization issue from a legal standpoint of the Constitution to equally value the methodology for every similarly situated property? And I don't know the answer to that, but I worry about that. We get there's got to be I mean, if statute says it's 1500 bucks and there's got to be either in receipts or in some kind of a nexus between that and grazing, we've used the Doctor Mosley's AUM equivalent, but I don't know what your thoughts. 01:10:40:19 - 01:10:42:08 Scott Mendenhall On that, Senator? 01:10:42:10 - 01:12:16:07 Eric Moore Well. I. I was I was going to get into that. I think that's a problem. The other problem that you have is now we're we're hand picking commodities based on what you're growing. We're using the spring wheat price and we're using the alfalfa price. But on livestock we're using it carrying capacity. So then does a wheat farmer come up and say well do. Why does my rich silty clay loam. It doesn't pay any less than, you know, gumbo, nasty, heavy clay that we farm out here, I think. And the other thing keep in mind, anytime you start bringing a thing to the legislature once, it can be your bill. But once it's introduced to a committee, it's not your bill anymore. And I'm always all nervous because really, I know it's a it's a hot topic, but I personally think compared to other states and compared to other land classifications, our ag land rates are pretty reasonable. And anytime you, you know, property taxes, like somebody said earlier, is like a balloon. You push down on one side and something else pushes, pushes out. Right. Because the counties never go with any less money. So, I think it's statutory change taking the marketing out of grazing land, the, the, the dollar value out would probably require more thought than we're going to get done today. I mean, I, I hear what Todd says and it shouldn't it's the stewardship shouldn't be affected by what a what a cow calf pairs worth. But I think the reality of it is, is we need to think long and hard about whether we'd want to open that can of worms before the legislature, in my opinion. 01:12:16:09 - 01:13:05:11 Bryce Kaatz Yeah. And I guess. That. Would probably. Be my recommendation. Obviously it's dropping to the lowest it's ever been, so it's not an issue. It's a non-issue this upcoming cycle. So we have another two years for you guys to give us some thought for us to give it some additional thought. And it probably be a more pressing issue. Price is tank and you know, this shoots back up with a ten year average. It shouldn't see that big of a fluctuation. But certainly nothing we have to solve today. We have at least two years to think about it, but wanted to get it on people's minds. 01:13:05:13 - 01:13:12:03 Robin Rude With that. Is there any other committee discussions? 01:13:12:04 - 01:13:16:01 Robin Rude Chairman Moor, That you would like to bring? 01:13:16:02 - 01:13:19:20 Eric Moore Not that I'm aware of. 01:13:19:22 - 01:13:24:15 Robin Rude Any members. Is there any other discussions that you would or any other questions? 01:13:24:18 - 01:13:27:10 Todd Olsen My mind. I'm good. 01:13:27:12 - 01:13:36:07 Cindy Johnson On the whole process. 01:13:36:09 - 01:13:41:01 Bill Billman Not seeing anything online. 01:13:41:03 - 01:13:56:22 Bryce Kaatz Okay, so I think this one will just circle back around and go through some of the things you guys can make recommendations on and just get a visual committee vote on them. And we call it good for this. 01:13:56:24 - 01:14:01:15 Todd Olsen Would you remind the committee again what what we can. 01:14:01:16 - 01:14:15:20 Bryce Kaatz Sure. So you'll make a recommendation on the capitalization rate. And you'll make a recommendation on the averaging methodology that we use for coming up with the commodity prices. 01:14:15:22 - 01:14:45:02 Bryce Kaatz So statute says we use a ten year average. The committee can recommend something other than that be used it being appropriate. So I think I'd already have the capitalization rate discussion forum. So the recommendation to not recommended different capitalization rate other than the 6.4% for that set in statute. 01:14:45:04 - 01:14:51:12 Eric Moore Yeah. Go go go ahead and run the call from there just in case I drop off. It's easier. 01:14:51:14 - 01:15:01:11 Bryce Kaatz Okay. All in favor of leaving the capitalization rate at the 6.4% for seven statute I. 01:15:01:13 - 01:15:25:05 Bryce Kaatz Any opposed say okay, I have it. It will stay at 6.4% under the ten year Olympic average for calculating the commodity prices there. The committee have discussion recommendation on something other than the ten year Olympic average. 01:15:25:07 - 01:15:26:03 Todd Olsen I think that's. 01:15:26:03 - 01:15:43:17 Todd Olsen The fairest way to do it, and it's the slowest rate of change. So we won't have the peaks and valleys. That will be a line of trend line instead of craziness. So I like to. 01:15:43:19 - 01:16:57:04 Bryce Kaatz The ten year Olympic average eyes. I all opposed nine. Ten year looking average. Limit would require a statutory change, which we could certainly pursue. But is there any recommendation on moving outside of the base commodity prices that are set in statutes that spring wheat, alfalfa hay. And then the private grazing fee? All in favor of just leaving those as be as outlined in statute? I. I. All opposed may. Okay. We will leave those as is. I don't know that we have anyone, but I think that's the main items that you would weigh in on and recommendations for. So lastly, open it in public. Comment I don't see anyone online actually want to comment, but we would provide that opportunity now. 01:16:57:06 - 01:17:14:16 Eric Moore Do you want a recommendation on the the carrying capacity, the 21 static or the static with the move? There was two options in your handout. Is 21 static or 21 subject to a 10 or 15% move. And we discussed it and as John said, beat that horse to death. But we never had a motion on it. 01:17:14:18 - 01:17:21:01 Cindy Johnson It would require a legislative change. 01:17:21:03 - 01:18:09:24 Bryce Kaatz So yeah, I think from the discussion, I think the recommendation is to leave things as is for now and give it more consideration to discuss at the next meeting. Everyone in favor of of that. All in favor of leaving the AUM as is currently, and bring it up as an agenda item at the next meeting, say I. Already I'm not seeing any public comment. That kind of wraps up our business. And thank you all for coming down and your participation. 01:18:10:01 - 01:18:33:09 John Lewis I'd encourage you all, as a partner to continue on the same classification field. It's just to me, it's the wrong way it is now. And I know you said maybe, you know, the department didn't want to push another bill forward, maybe try to find a legislator that would. But I just keep pursuing it because there's an answer out there. 01:18:33:10 - 01:18:39:04 John Lewis I don't know if it's the right one, but something should be changed. 01:18:39:06 - 01:18:55:08 Eric Moore Yeah, I'd agree with that. And everybody, you know, Cindy's there and everybody with their trade associations that their participation with. I know it didn't work the last time, but we have to have a recreational property tax class. These guys can't take these huge swaths out of production, whether it's farm ground or grazing or whatever it is to their little hobby ranch. 01:18:55:09 - 01:19:15:16 Eric Moore I mean, they it's a free country. They can do that. But there are going to pay a little more to the state if they choose to do that. And most people are doing it contains afford it. So I'd second what John said. I feel strongly that we need to bring that bill back and oftentimes don't get discouraged. Oftentimes bills take some 2 or 3 cycles before they kind of sink in and get accepted. 01:19:15:16 - 01:19:21:22 Eric Moore So a lot of the current statute was killed several times before it was finally passed. 01:19:21:24 - 01:19:24:02 Robin Rude That's okay. 01:19:24:04 - 01:19:40:06 John Lewis Well, I think when we got done as a committee, we probably knew that wasn't going to fly, but it was worth a chance. I thought, I don't know, I don't think anybody was real comfortable with the final decision. Would you agree? 01:19:40:08 - 01:19:49:03 Bryce Kaatz Yeah. Yes. That's where it wasn't an agency bill because it's policy decision. We just facilitated those meetings. 01:19:49:04 - 01:19:50:14 John Lewis And no, not. 01:19:50:16 - 01:20:19:13 Bryce Kaatz That forward. So we're more than happy, as we've said many times, to meet with any legislator if they're interested in buying one of those bills. All of that meetings and all of the documentation provided is still on our website. For more than happy to meet with anyone who is interested in maybe trying to bring one of those concepts forward and providing them with data or education. 01:20:19:15 - 01:20:35:18 Bryce Kaatz Sure, some bills will come forward again. I think the point of that committee was try to give it some more thought rather than what can be done. And during the course of the legislative session, stop. Agree. Our doors are always open. 01:20:35:20 - 01:21:12:03 Scott Mendenhall I agree in and I agree with more assessment that it takes. Sometimes it takes several sessions for good ideas to. I would certainly hope. And we're not bringing we're we're we only have about a dozen on the outside agency this time. We want to keep those from the governor's office and also feels stronger. There's just a lot of other pressing issues out there, and so we're not trying to couple sessions ago we had 55 last time. 01:21:12:03 - 01:21:53:00 Scott Mendenhall I think we have 16 or something like that. So we're we're not nor have we gotten the green light, the governor's office to pursue it down. This doesn't mean that's an agency at least leadership in our agency is certainly we're certainly supportive of getting at this issue because we know there's we have a fairness is important to us, and we know that there are a lot of classification demonstrated that, that if there's inequities out. 01:21:53:02 - 01:22:22:10 Scott Mendenhall So we would I don't know what we would we'd have to get approval to come in of some of the legislator to build back up, to be a proponent that we would could advocate for something like that happen again. If if any of you follow that process, as often is the case, there was a small minority of people around the systems. 01:22:22:12 - 01:22:53:23 Scott Mendenhall Issue that tanked that, and it was a I don't know, it's probably a one tenth of 1% of situations out there that where we didn't anticipate that in our committee that somebody that was a subsistence person living off of waivers potentially by this and their taxes raised. But that's the way the legislative process, they got enough energy around that. 01:22:53:24 - 01:23:14:15 Scott Mendenhall And there was some gaslighting and it was just tanked. But that doesn't mean that that doesn't mean that good policy, in my opinion, to just guide. And sometimes it takes about three tries. 01:23:14:17 - 01:23:33:09 Cindy Johnson I don’t k ow if you commented that there were a lot of legislators at the table who were in that category of land ownership that were very much opposed to their classification on their five acres and a goat. 01:23:33:11 - 01:23:36:08 Scott Mendenhall So God bless self interest. 01:23:36:11 - 01:23:38:18 Scott Mendenhall So. 01:23:38:20 - 01:23:50:21 Scott Mendenhall You don't like it 15 bucks in and be elected and you could change it. 01:23:50:23 - 01:23:58:03 Scott Mendenhall I still think worthwhile to raise the issue. And we got more dialog than we've ever gotten before as an. 01:23:58:03 - 01:24:13:01 Scott Mendenhall Agency around that issue and more understanding about the issue. So there's progress in a sense. 01:24:13:03 - 01:24:20:03 Bryce Kaatz No one has anyone else. Again, thank you all for your participation. And and we will adjourn.