The Ohio Farmers Union expressed profound disappointment when legislation to help correct the outlandish and unfair increases in farmland property taxes died in the Ohio General Assembly last week.
“While some committee chairmen and rural legislators went to bat for the CAUV bills pending in the House and Senate during lame duck, ultimately leadership in both Houses killed our efforts at reform,” said Ron Sylvester of OFU.
OFU CAUV expert and attorney Ted Finnarn said, “Many farmland owners have suffered property tax increases between 300% and 800% during the past few years.”
CAUV, or Current Agricultural Use Valuation, is the complex formula and system for taxing farmland in Ohio.
According to Finnarn, one of the main reasons that CAUV values have escalated is due to the very low interest-capitalization rate used in the formula, which has been affected by the Federal Reserves’ unprecedented low interest monetary policy the last few years. The lower the interest rate is, the higher the CAUV values are.
SB 246 and its companion Bill HB398 would have moderated increases in property taxed by excluding certain non-agricultural factors, such as actions of the Federal Reserve. The legislation would have also corrected a problem with land involved in conservation practices.
Currently, CAUV tax rates assume that property is being used for crop production. The proposed legislation would have allowed these acres to be valued at a lower minimum value. OFU had given testimony by Finnarn and supported both bills.
“What really killed the legislation at the last minute was a letter and material from the ‘schools’ lobby dated November 28, 2016, opposing the bills,” Finnarn said.
This letter was authored by the Buckeye Association of School Administrators (BASA), the Ohio Association of School Business Officials (OASBO) and the Ohio School Board Association (OSBA). They indicated that if CAUV values were corrected and moderated to some extent, then residential property taxes would increase and some non-rural school districts might receive less state funding.
“These letters ignored the fact that there has been a massive shifting of the tax burden to farm and woodland owners over the last few years with the higher CAUV values. Since the schools receive more funds locally from rural taxpayers and less from the state, we are right back where we were over 40 years ago before we had CAUV,” Finnarn said.
“Once again, we have an over-reliance on local property taxes to fund our schools,” said Finnarn. “And, we know this is unconstitutional under both our Ohio and Federal Constitution.”
“Unless changes are made very soon, a school funding crisis is coming where rural school districts will not be able to pass their tax levies – even the renewals,” Finnarn added.
“The Ohio Farmers Union is open to discussing these major changes in distribution of Ohio’s tax burden, but with today’s low commodity prices, farmers cannot absorb this massive and unfair shift in their share of the tax burden. Essentially, the state has balanced its budget on the backs of farmers,” Finnarn said.
Sylvester said that OFU has been working on this issue “since at least 2011.”
Finnarn and OFU President Joe Logan have held information events around rural Ohio, petitions have been sent to Ohio Gov. John Kasich and Finnarn has also advocated through his seat on the Ohio Dept. of Taxation’s Agricultural Advisory board.
“We’ll work for good and fair policy during the budget next year, and if that fails we’ll ask legislators for stand-alone bills once again,” Sylvester said.