Ohio legislature punts on CAUV farm tax reform

Farm and Dairy/Catie Noyes photo

(Editor Susan Crowell also contributed to this report)

SALEM, Ohio — Farmers and landowners who called on the state legislature to improve the formula for calculating the Current Agricultural Use Value for property taxes are on track for a setback.

Companion bills were introduced in both the House and Senate in the fall of 2015 that sought to make the CAUV formula more closely tied to agricultural factors, by eliminating such things as equity buildup, and taxing non-productive conservation ground at the lowest allowable value.

Both bills gained traction in the spring, especially in the Senate Ways and Means Committee, but were never sent to the full legislature.

Tight window

Brad Miller, spokesperson for Ohio House Speaker Cliff Rosenberger, R-Clarksville, said there are only three House session days next week and “there’s a tight window for all legislation at this point.”

Miller said House and caucus members discussed the bill various times, but members still need more time to review the complexities of the bill and how it would affect funding for all parties.

Rep. Brian Hill, R-Zanesville, and the sponsor of the House bill, said it looks like the House will try to finish up its other bills, and revisit the CAUV issue in January.

He said he was disappointed it didn’t get done this year, because he felt it was justified, and would have helped farmers who face a declining ag economy.

“I put a lot of effort into that (bill) and I know the impact to the rural community,” he said. “I know the struggles many farmers are having right now.”

The biggest pushback came from some county auditors, and certain school districts and school associations, which argued that changing the CAUV formula would cause a tax shift and tax burden for residential property owners.

The Buckeye Association of School Administrators and the Ohio Association of School Business Officials both testified Nov. 30 about the tax shift to residential property owners.

On the flip side, farmers and farm organizations have argued that the current formula, which taxes farmers for non-agricultural factors, including the historically low interest rates, has created an inaccurate formula and more tax burden for farmers.

Farmers and schools

Hill said there’s concern over how the bills would affect “each and every school district,” but he’s also concerned “about how it affects each and every farmer.”

Dozens of farmers and landowners testified in 2015 and over the past year, about the two- and three-fold increases they’ve seen in their CAUV taxes, and the strain that has put on their operation.

Adam Sharp, executive vice president of the Ohio Farm Bureau Federation, said CAUV reform remains a critical issue. He said the solutions his organization seeks are simple and appropriate.

“Given the farm economy the last two years, coupled with a nearly 1,000 percent increase in property taxes over the last decade … we need to make some simple fixes to the formula,” he said. “We will look forward to making sure that reform is moving forward in the next General Assembly.”

Failing to act

Ohio Farm Bureau President Frank Burkett, speaking at the organization’s annual meeting in Columbus Dec. 1, faulted House leadership for not making the bill a priority.

“Unfortunately, House leadership has refused to consider CAUV in the lame duck session,” said Burkett.

Burkett said Farm Bureau will continue to press the issue, adding, “I know they (lawmakers) will continue to hear us loud and clear.”

Other organizations, including Ohio Farmers Union, also made the CAUV reform a priority in 2016.

Ted Finnarn, a Darke County attorney and member of the Ohio Department of Taxation’s ag advisory committee, said school districts do not realize that higher CAUV taxes “actually reduced their state funding,” and also that “the higher local property taxes will hurt their ability to pass local levies in the future.”

Finnarn testified this fall that rural landowners want to pay their fair share of taxes, but that “they don’t want a tremendous shift in rural areas onto them and away from other aspects of real estate taxation.”

Next session

Hill said he expects CAUV reform to be reintroduced when the legislature reconvenes in January, which will give lawmakers more time to vet the bill, and possibly improve it by adding provisions for woodland owners, and landowners who grow something other than conventional grain crops.

“We’re probably better off taking a little more time and making sure it’s right,” Hill said.

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