Steamboat Springs Dried-up water holes, poor grazing land and high-priced hay are forcing some ranchers across the state to sell off livestock.
To make it easier for these ranchers to survive the drought and re-establish their herds next year, Sen. Jack Taylor, R-Steamboat Springs, is drafting a bill that would defer income taxes on these sales for up to four years.
Taylor said he would present the bill in the Legislature's special session, which begins Monday and should last at least three days. Rep. Brad Young, R-Lamar, will be the House sponsor for the bill.
The proposed bill would defer taxes that ranchers would pay for animals sold above the ranch's historical average of sales. For example, if a rancher typically sells 50 cattle in a non-drought year, but must sell 150 because of this year's drought, the tax deferment would apply to only 100 cattle.
"There's a lot of unloading (of cattle) because they don't have water, they don't have grass and they don't have hay," Taylor said.
Deferring tax payments, Taylor said, gives ranchers more time to get their herds going again after the drought ends.
There is a similar deferment of income and capital gains taxes at the federal level, but Taylor said it makes sense to have legislation at the state level. He said his proposed legislation would probably give ranchers a longer period of time to pay back the deferred taxes than they might have under federal rules.
"We just want to make sure that these guys can get as much credit as possible," Taylor said.
Taylor said the most serious result of the drought is that some ranchers have to sell their entire herd, including the mother cows that sometimes have been bred for decades. Usually ranchers would sell just yearling cows.
So far in Routt County, most ranchers have not had to sell a lot of their cattle, agriculture extension agent C.J. Mucklow said.
But he said he knows some local ranchers have reduced the size of the herds or have shipped cattle earlier than usual.
Jeanne VanValkenburg, whose ranch is on Colorado 14 in Jackson County, about 37 miles from Steamboat Springs, said many of her neighbors have had to sell most or all of their cattle herds already.
"People all up and down this road have sold their cows all the way from one load of their cows to completely liquidating, because they don't have any grass," VanValkenburg said.
She said the 500 head of cattle at she and her husband's ranch have had enough to eat so far because of a nearby meadow area they irrigated heavily at the start of the season.
But she said they might still have to sell a lot of their cattle later on in the summer, and if that happens, being able to defer payment of income taxes would be helpful.
"It would help," VanValkenburg said about Taylor's proposed legislation, "because if we have to sell out, the taxes would kill us."
Taylor said he hopes the bill passes in the special session, which was called by Gov. Bill Owens to look at death-penalty statutes, penalties for intentionally starting wildfires and ways to assist ranchers and farmers during the drought.
"Here is a clear way to help agriculture," Taylor said about his tax-deferment bill. "Otherwise we're going to have cattle operators that will go out of business and some of them for sure will never go back in."
Taylor said he is also considering drafting a bill to provide emergency funding for ranchers to buy hay and feed or to pay for transporting livestock to sell them.
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