SALEM, Ohio — Schools and county auditors warn that the effort to reform Ohio’s property tax formula for farmland could be costly to districts and residential property owners.
The Senate Ways and Means Committee held a fourth hearing of S.B. 36 on March 8 — a bill that would remove certain “non-agricultural” factors from the state’s Current Agricultural Use Value, or CAUV, formula and, according to supporters, make the formula more accurate.
The bill calls for factors like equity buildup and appreciation to be eliminated from the tax formula, arguing that those things aren’t tied to a farm’s ability to produce a crop. The bill also seeks the lowest allowable tax value for land taken out of production and put into conservation.
Opponents said a reduction in CAUV property would be offset by increases to residential property owners, because local governments and schools, by law, have to make up for the loss.
The expansion of benefits to farmers will shift the tax burden from agricultural to residential property owners, according to Ohio School Boards Association, Buckeye Association of School Administrators and the Ohio Association of School Business Officials in written testimony.
“This comes at a time when residential taxpayers have already experienced a major shift in responsibility for local property taxes.”
The schools claim that since 1990, the burden for residential taxpayers, on a statewide basis, has increased by 50 percent, which means that residential taxpayers are paying more of the total than business and agriculture. For 2015, residential taxpayers paid about 64 percent of Ohio’s total property taxes, according to the school group.
Related: View full written testimonies on S.B. 36.
But at the county level, and at the individual level, those numbers can change significantly.
Jed Bower, president of the Ohio Corn and Wheat Growers Association, testified at the same hearing that statewide CAUV values have increased by 300 percent for farmland, and as much as 700 percent for woodland, in just the past few years.
“I can personally attest to similar increases on my farm and the challenges that it presents,” said Bower. “My personal CAUV tax bill has increased by approximately 250 percent over the last three years.”
The school groups also argued the changes could cost schools money from the state, because the changes would lower the statewide average property value per pupil, resulting in reduced formula money from the state — especially in districts that have little agricultural land.
At previous hearings, farm groups said schools will lose money even if the bill is not passed — because owners of CAUV will be less likely to vote in favor of local levies, including renewals. They warned that some farmers are already organizing against school levies, because of the increases farmers have seen through CAUV.
The County Auditors’ Association of Ohio testified as an interested party, saying that taxes rose in recent years as a result of rising farm profitability, and that the values were felt years later because of the timing delay built into the formula.
The auditors said the tax swing could be viewed as “a market correction activity which has generally run its course.”
They said they expect to see “downward pressure on commercial agricultural real estate values,” even without further changes.
Lastly, the auditors association said the impact of changing the tax for conservation land is hard to calculate.
“It appears to be impossible to ascertain the number of acres that are devoted to a land retirement or conservation program under an agreement with an agency of the federal government,” the auditors wrote. “Without specifically identifying the types of federal conservation programs and knowing the number of acres affected, we are not only unable to calculate the impact of valuing this land at the lowest values of all soil types, but not at all clear as to a process to arrive at that amount.”
A spokesperson for state Sen. John Eklund, R-Chardon, said the committee would likely hold another hearing on S.B. 36 March 22.
- More parties call for CAUV reform (March 3, 2017).
- Ohio Legislature again weighing CAUV reform (Feb. 24, 2017)
- Ohio Legislature punts on CAUV tax reform (Dec. 2, 2016).
- CAUV bills on hold in House and Senate committees (May 23, 2016).
- Ohio House committee hears CAUV testimony (May 4, 2016).
- 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).