LANSING- Legislators are debating whether to provide additional tax credits to farmers committed to remain in agriculture for at least 20 years.

The bill, which will soon be taken up by the House, would let farmers claim a credit against their income tax or single business tax, in effect reducing their local property tax to $5 an acre.

Primary sponsor Howard Walker, R-Peninsula Township, said the incentive would encourage farmers to keep their land, rather than selling it to developers.

"The passage of this bill would be of paramount importance to preserving farmland," he said. "We 're the cherry capital of the world, we want to remain the cherry capital of the world."

The proposal would require participating farmers to agree to keep their land for 20 years in exchange for the tax credit. At the end of the period, farmers would have the option of repaying the tax credit and selling the development rights to the state.

"Local units of government will not see a decline in revenue because the state will reimburse the taxes," said Walker.

The proposal would cost state taxpayers an estimated $30 million a year.

Opponents of the bill include the Treasury Department, which doesn't think the state can afford the expense at this time.

"If the tax on agricultural land is based on use value, the tax should be between $18 and $19 an acre," said the Special Assistant to the State Treasurer Scott Schrager. "We're not sure the $5 an acre is appropriate."

Schrager also said that the state doesn't have the funds to run the program.

In response to the department's concerns, Walker contrasted the $400 million in annual tax breaks and incentives for industry with the $30 million he's proposing for agriculture. He also said that the bill would allow Michigan farmers to better compete for consumers statewide and nationally, regardless of their local property tax rate.

The bill would allow farmers to withdraw early in the tenth and fifteenth year of their contracts.

Schrager says the Treasury has a problem with the early buy out and that the option would benefit developers rather than farmers.

But Lee Schwartz, policy director of the Michigan Home Builders Association, said that the bill is not going to encourage developers to buy property under that kind of restriction.

"A developer is not going to buy the property and let it sit for 10 years, that's not realistic," said Schwartz, adding that developers would still have to pay the taxes based on the 10- or 15-year withdrawal agreement.

Rob Anderson of the Michigan Farm Bureau said the bill would encourage farmers to work with the local communities.

If passed, farmers could expect the tax credit to take effect by 2007.