COLUMBUS — Farmers, landowners and farm policy makers voiced their concerns for increased land values and high tax rates at a time when farmers are facing historically low farm incomes.
The Government Accountability and Oversight Committee heard eight testimonies and received an additional five written testimonies in favor of reform of the Current Agricultural Use Value (CAUV) formula during a second hearing of House Bill 398, May 3.
“Recently, farmers across the state have experienced skyrocketing CAUV increases,” said Brandon Kern, director of state policy at Ohio Farm Bureau Federation (OFBF). “The average statewide CAUV value increased by 294% from 2008 to 2014.”
Kern said, in 2014, farmland property tax payers paid $370 million more in taxes than in 2008, an increase of 307 percent. From 2010 to 2012, commodity prices and farm income were on the rise but, Kern said, “the gains farmers made didn’t come close to matching the corresponding increases in CAUV they now face.”
“While commodity prices rose about 100 percent during the very peak of the short boom, values, and therefore, taxes have increased closer to 300 percent.”
Appreciation and equity
H.B. 398, which closely mirrors S.B. 246, calls for a revision in the formula used to determine land values through CAUV to exclude appreciation and equity buildup.
The formula inflates farmland value by assuming the land appreciates and landowners achieve equity buildup, explained Kern. “H.B. 398 would prohibit the use of factors that assume land appreciation and prohibit the use of an equity buildup calculation.”
The bill also calls for land currently enrolled in a conservation program or in federal land retirement to be valued at CAUV’s minimum value, but only if it remains in conservation for at least three years.
“Under CAUV, a landowner continues to be taxed as if the land is yielding agricultural production income,” said Kern, adding it is hard to convince farmers to use conservation practices when they are being taxed more than they are earning on that land.
Wade Smith, a farmer in Lucas County and an Ohio Farm Bureau state board member, shared how significant increases in CAUV have impacted his organic tomato and specialty crop operation.
Smith said they started their operation in greenhouses to let the land lay fallow for the minimum five years required for organic field production.
“Per the last valuation, our CAUV values more than doubled. With the land laying fallow, we are now carrying a heavier tax burden for land that we could not use until the requirements for organic standards had been met,” said Smith.
If we don’t ensure farmland property taxes are accurately reflective of the production producing potential of the land, many farmers
won’t be able to survive.
-Brandon Kern, Ohio Farm Bureau
Woodland owner also expressed concern with high tax values. Paul Mechling owns a 310-acre tree farm in Ashtabula County. From 2008 to 2011, Mechling saw his woodland land value increase 236 percent, and from 2011-2014, he had another increase of 263 percent.
He said when the woodland Interest group in Ashtabula County surveyed landowners, it found average woodland CAUV land value increased 551 percent from 2008 to 2014.
He added that many parts of Ashtabula County are considered wetlands and soils are not allowed to drained to comply with federal farm programs. “So we had a 551% increase in CAUV land values and we are not allowed to farm the land. This trend is unsustainable,” said Mechling
“Taxes and fragmentation are two of the main problems for woodland owners,” said Ron Ott, who owns 180 acres of woodlands in Harrison County.
He fears heavy taxing will discourage woodland owners from hanging on to their land, forcing them to sell to developments, and resulting in a loss of Ohio’s forest life. “Eleven states have no tax on woodlands, Ohio should be No. 12,” said Ott.
Instead, Ott recommends an incentive program be put in place to encourage woodland owners and recognize them for their hard work. He calls the plan, The Ohio Woodland Owners Incentive Plan, which would include a zero property tax for woodland owners and best management practices to be implemented.
He recommends the plan be included into the Forest Tax Law or CAUV, or be introduced as a new plan model all together. “Want good quality air and water? Help save Ohio woodlands every way possible,” said Ott, concluding his testimony.
Trying to survive
“Nationally, from 2013 to 2015, we experience the second largest net farm income decrease in history,” said Kern, noting only the drop from 1919 to 1921 was larger.
“If we don’t ensure farmland property taxes are accurately reflective of the production producing potential of the land, many farmers won’t be able to survive,” said Kern.
- County auditors and farmers testify on CAUV bill (April 29, 2016)
- High real estate taxes pressuring woodland owners and farmers (April 26, 2016).
- First proponent hearing on the Senate CAUV bill (April 12, 2016).
- Ohio lawmakers seek additional CAUV changes (November, 2015).
- Landowners sue Ohio over CAUV calculation (June, 2015).
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