Michigan’s Primary Land-Use Plan a Failure

Some 50 pages of recommendations to promote smart growth in Michigan were recently proposed by Gov. Jennifer Granholm’s Land Use Leadership Council. However well-intended the effort, the council unfortunately squandered an opportunity to reform Michigan’s ineffective land-use policies.

Expanding government land-use controls dominates the council’s recommendations despite the proven superiority of private conservation initiatives. This misstep is particularly obvious in the council’s proposal to increase state spending on Michigan’s principal farmland preservation program, P.A. 116 (1974).

Tax credits totaling nearly $800 million already have been granted to owners of 45 percent of farmland statewide in return for maintaining agricultural production and forgoing development. But a recent study by the Mackinac Center for Public Policy found that the program has failed to achieve its fundamental objectives.

The bulk of the credits granted between 1982 and 2001 were applied to farmland distant from development pressures, according to our analysis. Thus, the program has had little effect on stemming the conversion of farmland to other uses. Instead, the tax credits mostly benefit farmers already least likely to develop their land.

Moreover, the state awards tax credits without distinguishing the relative environmental values of farmland or whether the farmland is likely to be developed. Demonstrating the program’s inflexibility, more of these conservation covenants have expired than have been renewed in the past six years, the study found.

These results should not be surprising. Myriad factors drive the supply of and demand for land — factors that change with lightning speed compared to the sluggish tick of the bureaucratic clock. Government-run programs are further complicated by the compromises inherent in the political process.

A compelling case can be made that the tax code should not favor open land over developed land. Indeed, the Michigan Constitution calls for equity in taxing property at its highest and best use value. To the extent that open space is demanded, investors can be relied upon to supply it — in the absence of government interference.

The problem is that the single largest landholder in Michigan is government, which controls a whopping 28 percent of all property in the state. The Michigan Department of Natural Resources controls 4.5 million acres, or 12 percent of the total land area. This sizable inventory ranks Michigan as 7th nationwide in the percentage of state-controlled land. Because of government’s virtual monopoly on open space, parks and wilderness areas, there is little incentive for private property owners to forgo development in favor of investing in open space.

Alarm over land use is rooted in the popular misconception that forestland and farmland are fast disappearing as residential and commercial development overtakes the landscape. But by every measure, Michigan remains largely a rural state. More than 18 million of Michigan’s 36 million acres is forestland, a share that has actually grown by 2 million acres in the past 20 years. For all the complaints abut traffic congestion, strip malls and new subdivisions, less than 10 percent of Michigan land actually is urbanized.

There are fewer farms in Michigan today. But the largest decline in farm numbers actually occurred between 1940 and 1970. The rate of farmland loss has since slowed. Even with 45 percent less land devoted to crops today as in the 1920s, yields have reached record highs. Michigan dairy farmers averaged 4,990 pounds of milk per cow annually in 1925 compared to 19,017 pounds per cow per year by 2000.

If policy-makers remain convinced that state action is necessary to preserve farmland, better results could be achieved by allowing private land conservancies to assume responsibility for the tax credit program. Most are better equipped than desk-bound state workers to assess the environmental value of various properties, customize covenants to maximize participation and to oversee compliance.

Relying on private organizations to achieve public policy objectives is a time-tested approach. The state awards millions of dollars in tax credits annually for private donations to thousands of charities. The tax credits serve as recognition of the state’s inability to provide the multitude of services that citizens, generally speaking, consider worthy of support.

A well-ordered approach to public policy does not assume that more governmental control is the solution. Gov. Granholm would do well to thank the council for its public service, then turn her attention on how best to harness the power of private initiative to enhance environmental quality.

(Diane Katz is director of science, environment and technology policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland. More information on environmental issues is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provided the author and her affiliation are cited.)