Farmland Tax Issues, an Update
Several bills dealing with the property tax assessments on Indiana farmland are before the General Assembly. For the past 2 years, bills before state lawmakers have frozen the soil productivity rate on Indiana farmland. Another freeze was set to be passed this year, but Indiana Farm Bureau’s Don Villwock says they have decided to support simply returning the productively factor to its original rate which has existed for years, “Our Purdue agronomists looked at all the figures and worked with them for over a year and found the change was less than 2%, so we went through a lot of effort for basically nothing.” He added was not worth having the legislature keep delaying the issue year after year, so they now support returning the rate to its original level.
Meanwhile farmers have been flooding the Statehouse pressing legislators to deal with the overall assessment on farmland. Despite a tight state budget, Villwock told HAT lawmakers are getting the message that something needs to be done to slow the increase on property taxes on Indiana farms, “Over half our counties have been to the Statehouse to stress that we have a crisis. Agriculture has had over $100 million in tax increases in the past few years, and farmers are scheduled to see a 17% increase next year and 18% the year after that. It is simply not fair.” This has occurred while other sectors of the Indiana economy have seen their taxes reduced.
Last week, the Senate Tax & Fiscal Committee heard SB 436, authored by the committee chair Sen. Brandt Hershman (R-Buck Creek), which includes provisions to address the farmland tax issue. SB 436 has a variety of recommendations from the Business Personal Property & Business Taxation Commission which met this past summer. For the ag sector, the bill includes a one year delay of the 2015 base farmland value of $2,050. $2,050 would be used again for taxes paid in 2016, which would otherwise increase to $2,420. By avoiding an increase of 18 percent, farmers will save about $53 million according to the Legislative Services Agency. All involved agree that delays do not solve the problem, but both delays provide time for fiscal leaders in the General Assembly to work with the ag industry to find a solution to the continually escalating farmland base value. Without intervention by the legislature, the base value will continue to increase until 2020 when it is estimated to peak at $3,230.
According to Indiana Farm Bureau, SB 436 also addresses the farmland to excess acre assessing problem that has been experienced by many farmers and rural landowners. Basically, the bill directs assessors to use the farmland assessment guidelines adopted by the Department of Local Government Finance in 2011, rather than assessing land not used in row crops with higher value per acre. “As the bill moves forward, a better definition of ag use will be needed,” said Katrina Hall who testified in support of the bill, which will be amended further and voted on in committee on Tuesday.
While farmers are making their voices heard, Villwock said it will take continued pressure to make sure action is taken to provide tax relief for growers.