For the past 2 years, the productivity formula by which Indiana farmland is taxed has been frozen. The Indiana General Assembly is considering a measure to freeze it again for a 3rd year. But at the Governor’s Conference on agriculture last week, Governor Pence promised he would work for a permanent fix to how Indiana assesses and taxes farmland, “For the sake of our family farms and for their opportunity for growth, I believe we need to find a clear solution for the agricultural assessment, sooner rather than later. Farm families deserve better than year to year delays that don’t provide permanent solutions.” Pounding the lectern for emphasis, Pence said his administration was committed to working with the General Assembly to resolve this issue.
The Indiana Senate Agriculture Committee voted 6-0 last Monday for SB 205, which requires property assessors to use 2011 soil productivity factors in their 2015 land value determinations. The sponsor of the proposal, Sen. Jean Leising (R-Oldenburg), believes the delay is needed to determine whether the state’s soil productivity factors are accurate. Katrina Hall testified in favor of the bill on behalf of Indiana Farm Bureau stating that, even if factors are finalized, they may need to be delayed for the next two years because some counties are not prepared to implement the new factors.
For taxes payable in 2015, all Indiana farmland is assessed a base value of $2,050 per acre which is adjusted by soil productivity and influence factors to calculate the assessed value of a parcel, which can have multiple soil types. In 2012, the Department of Local Government Finance released updated soil productivity factors based in part on the higher yields farmers now obtain from their lands. The new soil productivity factors would have increased 2013 farmland assessments by 25.5% or an estimated $57.4 million, according to the Legislative Services Agency. This year’s delay proposal next goes to the Senate Tax and Fiscal Policy Committee for further review.
Hall says the General Assembly needs to take a comprehensive look at not only the assessment rate but the overall property tax bill farmers are facing, “Especially based on the rapid escalation of values and the rapid decline in crop income over the past months.” She added that, with crop prices expected to remain low, a continued increase in farmland taxes would eat up all the profits a farmer would have, “We see a point where farmland taxes would absorb the profitability of grain farming, and that is not acceptable to our members across the state.”
The tax issue is the number one legislative priority for Farm Bureau. “Our members have told us, and shown us in their tax bills, that farmland taxes are just too high,” said Hall. “The current assessment formula for farmland has taxes going up nearly 40% in the next three years even as crop prices are bottoming out. That’s an unsustainable situation and it needs to be remedied quickly.” Hall told HAT there is generally good support and understanding among nonfarm lawmakers and she is optimistic the issue will be addressed this session.