Farmers face skyrocketing taxes, increases could affect schools


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The Springfield News-Sun provides unmatched coverage of issues that effect residents in Clark and Champaign counties. For this story, the paper spoke to state experts, local farmers and local education leaders to high dig into a decades-old tax law that is leading to higher taxes for farmers across Ohio.

A decades-old state formula designed to help farmers is instead causing farm values to skyrocket, an issue that might also affect rural school districts seeking new property taxes in the next few years.

Farmers across Ohio are learning the higher values are the result of a roughly 40-year-old program that was initially designed to keep farmland taxes more palatable. Ohio has long used a voluntary program called the Current Agricultural Use Value to calculate land values based on a complicated formula that includes crop prices, interest rates, soil types and crop yields, among other factors.

Due to an unusual mix of factors including record crop prices in recent years, the formula is causing values to spike to the highest levels in decades, leading to higher bills for many farmers.

Clark County farmer Jim Timmons and his family own about 350 acres of farmland and farms about 2,000 total acres. On some of the farmland he pays to rent south of Springfield, he said the taxes rose about $20 per acre, meaning he paid much higher rents than in previous years.

“Our taxes went through the roof,” Timmons said.

In turn, school districts across the state are also keeping an eye on the issue amid concerns that residents in rural areas may be less likely to support operating levies.

“School districts on the one hand are insulated because they’re going to collect the same dollars (on existing levies),” said Tom Ash, director of governmental relations with the Buckeye Association of School Administrators. “But they’re not insulated from the fact that it’s going to make it more difficult to pass new operating money.”

Despite the spike in taxes in recent updates, farmers are still getting a better deal than if values were instead based on recent land sales, said Gary Goodmundson, a spokesman for the Ohio Department of Taxation. Even with recent spikes in land values, the reduction farmers get through the CAUV means property is taxed at about 49 percent of its true market value, he said.

The formula could also shift more of the tax burden to farmers in parts of Ohio that have seen declines in the appraised value of residential property but higher farm values, Ash said. The appraised value of farmland has spiked in more than 40 counties statewide this year that have seen recent reappraisals or valuation updates. Farmers in Clark and Champaign County saw increases beginning last year.

In Champaign County, for example, the values of agricultural land increased on average by 62 percent, Champaign County Auditor Karen Bailey said. Agricultural land makes up about 30 percent of the tax base in the county.

The values in the Champaign and Clark counties won’t be adjusted again until 2017.

County auditors only implement the program based on the state formula.

“The current property tax system is complex, especially with farmland and the CAUV program,” Bailey said. “Initially the concept was basic, but years of legislation and attempts at correction have created something far from what was originally intended.”

One alternative school districts are increasingly looking at is an earned income tax instead of property taxes to reduce the burden on farmers already facing higher property tax bills, Ash said.

In Trotwood in Montgomery County, Bruce Kettelle saw his taxes rise from about $45 per acre to almost $120 per acre under this year’s formula. After reviewing the affect in rural and urban areas Kettelle, a farmer who also serves on Trotwood’s city council, argued due to the way values are calculated the spike is more pronounced in mostly urban areas compared to more rural areas of the state.

“It’s almost as if the CAUV is on steroids when it comes to urban farms,” he said.

Many farmers knew there would be an adjustment due to high crop prices in recent years. It took several years of high crop values to get to this point, Timmons said, so it may also take time for those prices to work their way out of the system.

“It’s a very fair way of doing it, it’s just basically the perfect storm came along,” Timmons said.

Brad Martin, superintendent at Tecumseh Local Schools, hasn’t followed the CAUV issue closely but said many rural districts are increasingly looking at earned income tax levies statewide. Tecumseh last passed a new levy in 1995.

“Any time you have anything that potentially can increase the value of land and therefore raise taxes makes it a struggle for us as a school district to pass a property tax,” Martin said. “I think if you look across the state, most of your rural communities are going toward earned income.”

At Graham Local Schools in St. Paris, the district last passed a new levy in 1992. Districts need to take into account issues like higher property taxes for farmers when deciding whether to seek a new levy, Graham Superintendent Norm Glismann said.

“If you were potentially trying to pass a new-money levy, you might have a certain group in your community that might think they’re already paying an increase and it’s possible they might be inclined to vote against it,” Glismann said.

Northeastern decided against placing a 1 percent earned income tax levy on the ballot this fall but could be on the ballot next year, Superintendent Lou Kramer said. Part of the reason for seeking that type of levy is sensitivity to issues facing farmers, he said, as well as retirees on a fixed income.

Timmons said he believes it’s his obligation to pay his share of taxes for school districts.

“I will pay whatever the school district gets passed,” Timmons said. “But I’m talking to my neighbors and they’re saying, ‘No way, my taxes have doubled on my farmland so I’m not going to vote for that.’”

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