Alaska lawmakers debate farm tax break for horses, flowers

The Alaska House Community and Regional Affairs Committee adopted a narrower version of a farm tax bill Tuesday, removing horses from the livestock definition and limiting farm use to products for human consumption or livestock management.

Senate Bill 200, sponsored by Senator Jesse Bjorkman, would restore tax deferments for floriculture and horse operations that were removed in 2024 legislation. Bjorkman called the exclusion an unintended consequence of last session's farm bill. The committee substitute adopted Tuesday in the bill's first hearing narrows eligibility in ways Bjorkman said would leave out peony and horse-related operations he sought to help.

Alaska News previously reported that the Senate advanced a farm tax bill last session that carved out an Anchorage exemption. That 2024 legislation updated farm-use statutes in response to the 2023 Alaska Food Strategy Task Force, streamlining applications and including farm structures like barns. But it also removed horses and flowers from the definition of qualifying agricultural uses, a change to language that had been in place since 1967.

Rita Jo Schultz, who operates a peony farm in Homer, testified the 2024 change cost her operation about $7,000. She said her family is now considering abandoning farming for farm-stay cabins instead.

"We are actually thinking about doing more like farm stays," Schultz said. "We are thinking about building cabins on the property for that type of use."

Supporters of the broader bill argued Alaska should support the entire agricultural ecosystem rather than narrowly prioritizing food security. Amy Seitz, policy director for the Alaska Farm Bureau, said removing non-food farms creates an artificial divide in the industry.

"A vibrant agriculture industry is an ecosystem," Seitz said. "Our non-food farms are integral to the success of food-producing farms."

Seitz pointed to hay farmers who sell to horse owners as an example. Bjorkman said farmers have raised concerns that under current practice, they must track which hay goes to which animals to determine eligibility for the farm-use rate.

"If you grow hay and you feed it to a cow or you feed it to a goat, and then someone eats the cow or drinks the cow's milk or eats the goat or drinks the goat's milk, you get a special farm use rate for your taxes," Bjorkman said. "But if a horse eats that hay you are out of luck. This creates a rather onerous process in our tax code."

Peony farmers face similar complications. Many grow both flowers and vegetables on the same ground to diversify revenue, Bjorkman said. Excluding peonies from the farm-use rate forces assessors to divide parcels by crop type.