State lawmakers pushed forward this week with changes to a decades-old formula that was designed to help agriculture — one of the state’s biggest industries — but Clark and Champaign county farmers say has led to swelling property taxes.
The Current Agricultural Use Value is a roughly 40-year-old formula designed to keep property taxes more palatable for farmers and to deter them from selling their land to commercial developers. Instead many farmers across Ohio have watched their property taxes jump as much as 300 percent in recent years, even as their income is pressed.
The proposed changes also have critics, who argue it will shift the burden to residential taxpayers in some cases and could mean lower revenue for schools.
Agriculture contributes $105 billion to the Ohio economy and accounts for one in seven jobs in the state, according to the Ohio Farm Bureau.
The Ohio Senate approved a bill Wednesday that would adjust the formula to provide some relief. Members of the Ohio House have attached similar language to a proposed budget bill. Lawmakers have to decide which route to take to try to approve the changes.
An analysis by the nonpartisan Ohio Legislative Service Commission indicated lower taxes on land in the CAUV program would be partially offset by higher taxes on other property. School districts across Ohio could see revenue losses of $13 million or more in fiscal year 2018, the commission said, and as much as $17 million or more in fiscal year 2019.
The impact on residential taxpayers could vary across the state. Counties with more agricultural property would see a larger tax shift to residential taxpayers, the commission said.
The Ohio Department of Taxation, which didn’t take a stance on the proposals, simulated the impact of the proposed changes in eight counties. In Van Wert County, for example, where farms accounted for about 51 percent of property value, the average increase in residential taxes was 7.8 percent.
“If you have a lot of agriculture in your (school) district, there’s a bigger chance your residential taxpayers are going to be impacted,” said Barbara Shaner, a spokeswoman for the Ohio Association of School Business Officials, which opposes the proposed changes to the tax formula. “If you don’t have much agriculture, that issue is not as much of a problem.”
The state has made other adjustments to provide relief to farmers in recent years, including more closely tying tax values to current economic conditions, as well as more accurately valuing woodlands. But farmers have said more significant changes are needed, as some farmers in Clark and Champaign counties saw their property taxes double, and in some cases triple, after the most recent assessment.
Jeff Adams, who farms in parts of Union, Madison and Champaign counties, saw an increase of $20 per acre on property he owns with his wife. That meant a tax bill that spiked about $5,000 higher on that property.
“In no other business that I know of does such a sweeping change occur to what is supposed to be a fixed cost in our budgets,” Adams said. “This huge increase not only makes it hard on the landowner but the farmer who has to pay rent.”
Tom Nisonger, who’s been farming in Champaign County, said he’s made due because he’s been financially conservative in years when farming has been more profitable. Now, he and Adams said they’ve cut back on buying equipment, delayed repairs or have made other adjustments to keep their heads above water.
“This year we’ve cut more costs than we ever have,” Adams said. “We’ve made cuts where we can without sacrificing soil quality or our future.”
The Senate bill will shift taxes somewhat, said state Sen. Bob Hackett, a Republican whose district includes Clark County. But he said farmers have been paying a significant share of taxes to the state’s school districts since taxes began to spike around 2008.
“The farmers have been really faced with some serious increases at the same time the crop (prices) have been dropping,” Hackett said. “We’ve made the system more current, but there’s still a time lag.”
Instead of making incremental changes, Shaner said her organization would be open to a top-to-bottom review of the CAUV formula and its impact on taxpayers.
“We don’t have the confidence there has been any kind of objective review of what the formula should look like,” she said.
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