Ohio Senate committee hears CAUV bill

Front of Ohio Statehouse
Front of the Ohio Statehouse. (Farm and Dairy file photo)

SALEM, Ohio — A bill designed to reform certain parts of Ohio’s Current Agricultural Use Value and more closely tie the CAUV value to agricultural conditions, saw its first action April 5 in the Senate Ways and Means Committee.

The bill’s primary sponsor, Sen. Cliff Hite, R-Findlay, gave proponent testimony, in which he praised the intent and importance of CAUV, but also the need to update certain parts.

“In an industry with such small profit margins, many farmers simply could not afford to keep farming their land without CAUV,” he said.

The CAUV formula allows land to be taxed according to its use in agricultural production, rather than its development value. It generally saves farmers quite a bit of money, but in recent years, some farmers have seen their taxes more than double.

Two bills

The Senate bill, S.B. 246, mirrors H.B. 398, and both bills are a continuation of CAUV reforms called for by Ohio farmers and landowners, the Ohio Farm Bureau and other farm groups.

Hite noted in his testimony, that part of the increase is due to the rising commodity prices, which rose to historical levels during the most recent assessments. But other factors, he said, have “artificially inflated the taxes our farmers are paying.”

The Senate bill, like the House bill, seeks to do two main things.

Accurate values

The first is to improve the valuation of farmland by prohibiting the use of certain nonagricultural factors — like “equity buildup” and “appreciation.”

Currently, the formula attempts to account for a theoretical percentage of equity buildup achieved by farmers who take out loans to finance land. And the formula assumes that the demand for farmland will increase at a pre-determined rate — assumptions that have “no bearing” on the land’s capability to produce agricultural income, according to the bill.

Second, the Senate bill would make farmer’s investments in conservation practices more tax friendly.

Hite’s bill argues that when farmers take acreage out of farm production and place those same acres into practices that help preserve the soil and protect water quality, the value of that land “should reflect that lack of production.”

Currently, the formula taxes farmers as though an income is being realized on those lands — even though an income is not realized.

Earlier work

Farmers were successful in getting some of their reforms adopted in 2015, by working with the Ohio Department of Taxation and its commissioner, Joe Testa. They chose to work through the legislature when they felt the final two reforms were not being adopted.

As of Farm and Dairy’s press time, the Senate Ways and Means Committee was scheduled to hold the second proponent hearing April 13.

The House version of the bill sits in the Government Accountability and Oversight Committee, and has not been heard. The House bill was sponsored by Rep. Brian Hill, R-Zanesville, and has more than two dozen co-sponsors.

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