Monday, February 17, 2014

Palladium-Item Reports Bill Affects Farm Property Taxes

From the Richmond Palladium-Item:

Farmland property taxes would rise significantly next year if the Indiana General Assembly fails to again pass a bill stalling the use of new soil productivity factors.

State Sen. Jean Leising, R-Oldenburg, authored Senate Bill 111 delaying the new factors. The bill, which passed the Senate last month on a 48-0 vote, maintains soil productivity factors used since March 1, 2011, and would be retroactive to Jan. 1. The bill will be considered by the Indiana House of Representatives.

The same bill was passed by the General Assembly in 2013, a bill which also required the Department of Local Government Finance and the Purdue University School of Agriculture to provide a report on the proposed soil productivity factors.

The report was due to the General Assembly by Nov. 1, 2013.

“They didn’t get the job done,” Leising said. “DLGF and Purdue were charged with looking at the proposed formula and it didn’t happen.”

The two agencies have worked on the issue, but the data from the Natural Resources Conservation Service also includes “management,” factors and Indiana’s soil productivity factors already were based on average management, Farm Bureau lobbyist Katrina Hall said.

“Adjustments are needed,” Hall said. “There’s the potential of a $57 million increase for farmers without much reason.

The NRCS forwarded information to DLGF without any other input. There should not be changes without an open process.”

Last week, DLGF issued a memo to county assessors saying productivity factors changes likely will be delayed another year, Hall said.

Assessors preparing for the March 1, 2014, assessment date were told they might again be using soil productivity factors used in 2011, 2012 and 2013, and software vendors should be prepared for that possibility, according to the DLGF memo.

“The Department of Local Government Finance does not consider the factors certified on Feb. 2, 2012, to be in effect and will continue to work towards new factors with the Purdue University School of Agriculture,” the memo said.

Farmland taxes already are increasing, even without changing the soil productivity factors, Leising said.

Farmers were seeing high grain prices and also much higher land prices, which are part of the assessment formula.

“Seven years ago, the base value of farmland was $880 an acre. This year, it’s $1,760 an acre, a 100 percent increase. It will triple in a couple more years,” Leising said. “Soil productivity factors have been constant until DLGF wanted to change them.

“If the soil productivity factors change, property tax bills could increase by 30 to 40 percent. It’s a very serious issue.”