Ag Tax

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Gov. Rod Blagojevich is plowing ahead with efforts to balance the state budget, but local farmers say it could come at their expense.

Under the governor's budget, farmers whose gross income is over $1 million a year will now have to pay sales tax on feed, seed, fertilizer and chemicals, products that have been exempt for 15 years.

While only one percent of farmers would be affected, ag producers are still concerned. They say this opens the door to lower the limit and eventually reinstate the sales tax for all farmers.

Durand farmer and businessman Bernie Walsh is also worried for other reasons. He sells seed and is worried about losing business to Wisconsin or other bordering states that don't charge the sales tax. Walsh says the plan will be hard to implement and is simply unfair.

"He's proposing taxing an input to produce a raw commodity. That raw commodity is taxed on down the food chain. The end product is taxed, so it's double taxation," says Walsh.

The governor says tough choices have to be made and this is a loophole that benefits wealthier farmers and needs to be changed. These plans still have to be approved by the state legislature.

The governor is also asking legislators to eliminate a program for agriculture research that looks for new technologies to save farmers money and time and improve their yields.