Pharos-Tribune

February 11, 2013

Leveling the field

Local farmers face property tax hikes if Senate bill fails

by Sarah Einselen
Pharos-Tribune

— Unless statehouse representatives approve a Senate bill that was fast-tracked late last week, the base tax on farmland will end up about 50 percent higher by 2016.

State Rep. Bill Friend, the Macy representative from District 23 and one of just two full-time farmers in the Indiana House, represents part of Cass County. He said Friday that Senate Bill 319, proposed in January, had been put on the fast track in the House in order to get it passed in time for this year’s property assessments.

The bill is meant to retain last year’s structure for determining property taxes — keeping farm property taxes from rising out of proportion with residential and commercial property taxes.

Farmland productivity is factored into the base rate to arrive at the actual tax on a parcel. Currently, the base rate for farmland property taxes is supposed to go up more than 8 percent this year to $1,630, then another 8 percent in 2014, more than 16 percent in 2015 and a whopping 18.5 percent in 2016, according to data from the Cass County Purdue Extension.

That rise is much higher than is expected in other property sectors, said Tamara Ogle, a Purdue Extension Educator in Cass County.

“Even if the economy recovers, we’re not going to see that kind of increase in business uses or residential uses,” Ogle said. “So farmland’s going to make up a greater share of the tax base over the next three to four years.”

“There’s no way the assessed value of housing is going to increase 16 percent” in one year, she added. “Farmers are going to pay more of the share of our property taxes.”

Agricultural land taxes made up about 23 percent of county property taxes in 2012, according to the state Legislative Services Agency’s county property tax studies.

The state legislature is looking specifically at the way farmland productivity is rated. The Department of Local Government Finances, which handles property tax rates, issued new soil productivity ratings this year which would have caused much of the increase.

Friend said Friday that the fast-tracked bill will probably be voted on this week. He anticipated a handy approval of it.

“It’s a fairness issue to make sure everybody gets relief,” he said. Property tax controls in place have held most property tax rates static, added Friend, while “the farmland has continued to increase and this little adjustment by the DLGF was going to push it up another 20 percent. That’s a pretty hefty tax increase.”

The bill was fast-tracked in order to pass and go before the governor for his signature before the year’s property tax assessments got under way.

Senate Bill 319 would also require the DLGF to submit future changes to the base rate figuring to the legislature for approval, Friend said.

Agricultural landowners have already seen the base rate rise from $880 in 2007. Last year’s base rate was $1,500.

Cass County has some fairly good land, said Dave Forgey, president of the county Farm Bureau, and the rise in property taxes would have especially affected farmland owners around Galveston and Young America, where some of the county’s best land is centered.

“Things have changed dramatically for farmers while homeowners still get a pretty good deal,” Forgey said. “At least it gives [legislators] a little more time to study these things and get a better handle on them.”

Ogle explained that on the whole, changes to the base rate affect crop farmers more than animal farmers. Farmers who rent land will see any changes to the property tax rates trickle down into the rental prices.

Sarah Einselen is news editor for the Pharos-Tribune. She can be reached at sarah.einselen@pharostribune.com or 574-732-5151.