Private landowners adding their timber to the forest product industry through Michigan’s Qualified Forest Property program will have more flexibility and fewer penalties under legislation approved this week by the House to increase program participation.
House Bills 4969-70, sponsored by Reps. Frank Foster and Matt Huuki, and HB 4302, sponsored by Rep. Ed McBroom, ease some of the program’s land-use limitations currently in place and eliminate an excessive penalty for withdrawing from the program.
“The goal of the QFP program is to increase the volume of Michigan timber that is produced for the forest products industry, creating local jobs and growing our state’s economy,” said Foster, chair of the House Natural Resources, Tourism, and Outdoor Recreation Committee. “Ironically, the way the five-year-old program terms are currently set up, the landowners haven’t found the potential tax savings much of an incentive.”
The program has a 1.2 million acre cap for participants interested in becoming exempt for the 18 mills state education tax. So far it has attracted only 70,000 acres.
To increase participation, the first two bills in the legislative package propose to allow some structures on the property, such as hunting shacks, small cottages and pole barns, which with one acre would be subject to the tax; harvest reports and updated management plans would only be required after a harvest, not annually; clarifies local taxing units operate the program, not the DNR; adjusts the Commercial Forest Act to better coincide with QFP; and defines auditing procedures and responsibilities for program compliance.
“We’ve been working with representatives from the forest and agriculture industries and local governments to make the Qualified Forest Program a useful tool that will yield positive results for everyone involved,” said Huuki, R-Atlantic Mine. “Once the program begins working correctly we should see better managed forests, increased economic activity and improved wildlife habitat.”
HB 4302 recalculates the biggest roadblock to people’s participation – a steep penalty for removing a property from the program. Currently, the recapture tax is figured by multiplying all taxing units’ millage rates by the State Equalized Value, multiplying that sum by seven, then doubling that amount if no timber harvest had taken place on the property.
“That can be a very steep check for someone to have to come up with after receiving potentially very little benefit,” said McBroom, R-Vulcan. “It seems people are willing to do the forest management part of the program, but it’s asking a lot of someone to take that kind of risk when you don’t know what the future might hold. It’s understandable that not many people are willing to sign on for it.”
The new proposal would require a landowner who takes their property out of the program to only repay the benefit they received – the 18 mills state education tax multiplied by the number of years they were enrolled in the program, with a maximum of seven years.
The bills are now in the Senate for consideration.