Posted on Freedom Advocates on March 3rd 2004
Oregon State Senator Ted Ferrioli proves that instead of conserving precious resources, fundraising efforts to acquire land for conservation are a ripoff to the taxpayer with no guarantee that the promised benefits will materialize.
Recently, a friend told me of a fundraising effort in Oregon that raised more than $65 million in cash and pledges over the past two years for acquisition of lands considered to be the “last of the wild.” I told her those programs were a scam on state and federal taxpayers and actually do irreparable harm in rural communities. She was shocked at my response and demanded that I prove the point that instead of conserving precious resources, these programs are a ripoff to the taxpayer with no guarantee that the promised benefits will materialize. So, here’s how the scam works:
Ripoff #1 happens because donations to these non-profits are tax-deductible. Ordinarily, this is a good thing, allowing schools, churches and charitable organizations to raise money and do good works. But the tax code makes no distinction between preservationist groups and real charities, making a perversion of the whole concept of charitable giving.
Ripoff #2 occurs because non-profit funds are used to “leverage” other funds, increasing the resources available to purchase targeted properties. Non-profit purchases become a “magnet,” attracting grants from watershed councils, conservation districts, state and federal agencies, and other non-profits. Dollars sucked up by leveraging are unavailable for restoration projects and real charitable and educational institutions.
Ripoff #3 occurs when negotiations begin. Real farmers and ranchers can only offer the amount based on what the land will produce in animal units, crops or timber. Because most non-profits have no intention of timber harvest, farming or ranching, the whole concept of “the market” is destroyed. And non-profits are spending “free money,” so the sky is the limit! Non-profits now “make the market” in some areas, forcing out the real farmers and ranchers.
Ripoff #4 happens when the seller learns that non-profit organizations can offer more than the asking price (on paper), then, accept a “donation” of a substantial part of the sale price (on paper), which can significantly reduce the seller’s capital gains taxes! In other words, non-profits can structure a transaction that “nets” the seller more cash with less “out-of-pocket” expense. This practice borders on fraud. Who loses? All federal, state and local taxpayers and “real” ranchers and farmers who can’t compete with such inducements.
Ripoff #5 happens after the title is transferred. Since the property is now owned by a non-profit entity, it comes off the tax rolls, increasing the burden on other taxpayers and robbing local jurisdictions of revenue for schools, hospitals, police and fire protection.
Ripoff #6 happens when non-profits take the acquired land out of production. Since there is no intention of growing crops, timber or livestock, the production values, including wages, income taxes and earnings, never occur. The longer the property lies fallow, the more the community loses in terms of jobs and revenue to local and state government.
Ripoff #7 happens when public access to the property is cut off. Most private land owners allow some sort of recreational use, and millions of acres of private land are available to hunting and fishing by permission. Even though these properties are acquired with tax-subsidized gifts, non-profits almost never allow public access, fishing or hunting.
Ripoff #8 happens over time. Non-profits focus their efforts on acquisition, termination of production and locking up the land. Rarely, if ever, do they commit to long-term management planning or funding. Such properties often become havens for weeds and predators, and become a huge burden for local fire protection districts, weed control districts, and predator control authorities, not to mention neighbors.
Over the next 10-15 years, futurists say that Oregon’s population will increase by 1 to 1.5 million people. Most will live in cities. But how many of those new residents will be farmers? Ranchers? Tree Farmers?
Will the misguided efforts of preservationists, our flirtation with socialist-style central planning, our hostility toward ranching and farming and our state tax policies make Oregon a place where people must live and work only in over-populated metro areas and where the rural landscape is reserved for trophy homes and wildlife preserves?
Don’t get me wrong. Non-profit charitable and educational institutions do a lot of good things in Oregon, and not all acquisitions of private land for public purposes is bad. But Oregon state and local governments have lost a greater percentage of revenue than in any other state in the Nation, and we still have the country’s highest rates of hunger, poverty and unemployment.
In view of these realities, how much more rural land should be taken out of production and off the tax rolls? How long should state government continue to subsidize elimination of food and fiber production and the jobs they create?
Maybe it’s time to re-examine the way in which non-profits are allowed to get and keep their tax-exempt status and what they do with the millions they raise, then, judge the tree by its fruits. Maybe it’s time we limited tax-exempt status to charitable and educational institutions that actually do charitable work or offer classroom instruction. The state would have far more in spendable revenue without raising taxes on private citizens or business, and the future of agriculture, ranching and forestry would be far more sustainable.
Senator Ted Ferrioli can be contacted at Ferrioli.Sen@state.or.us
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