By Kevin McNabola
Orange Board of Finance
Kevin McNabola
Orange is a small, historic and community‑oriented farm town known for its rural charm, strong schools and deep agricultural roots. It currently has a nice mix of open space and farmland with a solid tax base.
The passage of Public Act 25-152, signed by Gov. Ned Lamont, is one of the most comprehensive agricultural bills enacted in Connecticut in decades, and preserves for the time being the financial viability of farms, modernizes agricultural practices, preserves farmland and strengthens Connecticut’s local food system.
From both an economic development and municipal government perspective, the law is good for Orange and presents significant benefits. But it also creates several fiscal and policy challenges.
One of the major advantages is significant property tax relief for farms around the state. The legislation increases the mandatory municipal farm machinery and equipment property tax exemption from $100,000 to $250,000, while also allowing municipalities to adopt an additional optional exemption of up to another $250,000.
The benefits include improved farm cash flow, investment in newer equipment, allowing family farms to remain competitive and making Connecticut more competitive with neighboring agricultural states.
The law creates a state tax credit for investments in farm buildings, machinery, equipment and agricultural infrastructure. This lowers the effective cost of modernization and expansion. For many farms, equipment taxes represent one of the few local taxes directly tied to production assets.
This credit also encourages farmers to make significant purchases in additional capital investment, which will increase agricultural productivity and improve long-term farm profitability.
Another key provision is reduced regulatory burdens, which will lead to lower construction costs, faster installation, greater season extension and improved crop yields. This will particularly benefit small vegetable farms. The law also supports local food system and container farms producing food for schools and food panties. We will have improved food security, reduced transportation costs and year-round production.
It’s important to note that the law does have potential disadvantages, particularly with respect to municipal revenue loss. The largest concern for municipalities is reduced property tax revenue. Increasing exemptions may significantly reduce taxable grand lists in communities with dairy farms, orchards, nurseries and greenhouses.
For small towns with limited commercial tax bases, this could be meaningful.
For example, if a municipality has 10 qualifying farms and each receives an additional $150,000 exemption, taxable value falls by $1.5 million. Depending on mill rates, this can reduce annual tax collections by tens or hundreds of thousands of dollars, shifting the property tax burden to residential and commercial taxpayers. This could impact small agricultural towns.
Unlike some other tax exemptions, there is no full state reimbursement to municipalities for the lost local revenue associated with these expanded exemptions. As a result, towns may need to absorb the fiscal impact through budget adjustments or by shifting more of the tax burden to other property owners.
Larger commercial farms are generally better positioned to take advantage of investment tax credits, equipment exemptions and capital improvements. Smaller farms with limited access to financing may realize fewer benefits.
Another factor that comes into play with farms is what will be the impact of Connecticut’s new housing law? While the law is primarily designed to address the state’s severe housing shortage, it could indirectly increase development pressure on agricultural land unless municipalities proactively protect farmland through zoning and preservation policies.
Although the agriculture industry has shown surprising resilience, supported by strong consumer demand for locally grown food, state investment and new tax incentives, the state continues to lose developable farmland to residential and commercial development. This is particularly happening in western and central parts of Connecticut, where land values are among the highest in the country.
Protecting our farmland in Orange and around Connecticut through zoning preservation measures should be a priority. The alternative of expanding too quickly with additional apartments, townhouses and multifamily developments would most certainly put a significant financial strain on town finances, which in turn would adversely impact taxpayers.
Kevin McNabola is the chief financial officer for the city of Meriden and a member of the Orange Board of Finance.