With state lawmakers searching for ways to reduce a deficit predicted to hit $34.6 billion, Gov. Gray Davis wants to add a 38-year-old state program to preserve farmland and open spaces to the chopping block.
The state spends about $40 million a year to reimburse city and county governments that sign Williamson Act contracts.
The act allows farmers, ranchers and other property owners to have reduced property taxes, provided they agree to keep their land in agriculture or open space for at least 10 years.
Widely viewed as one of the most important land conservation programs in the state, Lodi-area growers worry that the loss of state funding will force San Joaquin County to drop the program as well, thereby raising taxes for local farmers.
"It will hurt everybody, whether you have big farm or a small one," said Kurt Kautz, owner of Kautz Farms in Lodi.
With about 400 acres covered by the Williamson Act, Kautz worries that the loss of the tax incentives will further shrink his already razor-thin margins.
The state reimburses San Joaquin County for $2 million in Williamson Act contracts, County Agriculture Commissioner Scott Hudson said.
If the tax breaks are removed, the additional cost will put some growers out of business and force them to sell prime farmland to developers, he said.
"It's one of the more effective tools to protect agriculture land by offering incentives," Hudson said.
Named after former legislator John Williamson, who died in 1998, the property tax assessments are based the land's income potential as agricultural property instead of its value if sold for commercial or residential development.
The contracts are automatically renewed every year for another 10 years unless the grower or the local government files a cancellation notice. If that happens, the contract is phased out over the next nine years.
Twenty-two of the 54 counties involved in the program offer bigger property tax savings for landowners who sign 20-year deals.
More than half of the state's agricultural land - 16.3 million acres - is covered by the contracts.
State officials have raised the possibility that funding might be restored when the budget rebounds, and counties and cities can still keep up tax incentives on their own without state backing.
The Legislature's budget analyst, who has been critical of the Williamson Act, is recommending that lawmakers gradually reduce the state's support, say by 10 percent a year, to ease the impact on local governments.
California's population, now about 35 million, is projected to reach nearly 59 million by 2040, and some of the biggest growth rates are expected in the state's farm belts.
Meanwhile, Kautz, who grows winegrapes, apples and cherries in the Lodi area, continues to be an active opponent of Davis' plan.
"There are bigger things we can cut, why are they taking this?" he said.
The Associated Press contributed to this report.
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