COLUMBUS – Ohio Farmers Union (OFU) has proposed substantial recommendations to the governor, the Ohio Department of Taxation and the General Assembly concerning corrections and improvements to the Current Agricultural Use Value (CAUV) program.
Under CAUV, farmland is taxed on its agricultural use rather than its Fair Market-Recent Sales Value (FMV).
According to Ted Finnarn, attorney and long-time member of, “The CAUV formula has worked well in the past, but during the recent three years, it has gone out of whack,” said Ted Finnarn.
Finnarn is a long-time leader in OFU, a Darke County attorney and member of the Ag Advisory Committee to the Ohio Department of Taxation.
“The problem was mainly due to the extremely low interest–capitalization rate in the formula, as a result of the Federal Reserve’s unprecedented monetary intervention policy known as ‘quantitative easing’ and the lack of a three-year averaging factor in the computations. “
Farmers around the state have been slammed with rising property tax values as a result over the past three years. In tax year 2014, those farmers whose land is up for revaluation are seeing tax increases from 100 to 200 percent. Another factor affecting rising values is lower grain prices versus a farmer’s expenses.
After a careful review of the CAUV history over the past almost forty years, consultation with farmers, appraisers, attorneys, economists and other parties, OFU has recommended the following corrections and changes in the formula:
- Establish a Stabilization Equalization Factor (SEF) with three-year averaging within the formula that would even out the “roller coaster” gyrations in the CAUV as it is applied to the applicable counties during their year of valuation change.
- In regards to the capitalization-interest rate, go back to a longer term fixed rate, that was originally used in the formula (30 years) and take out any influence from the QE program.
- Return to a more traditional loan-equity percentage split of say 80% loan vs. 20% equity rather than the recent “too restrictive” breakdown of 60%/40%. (The program originally used a 90%/10% mix).
- Eliminate and take out the two (2) sinking fund adjustments of “less equity build up” and less “5% appreciation” which were mistakenly put in a few years ago, since they are somewhat related to commercial building appraisal methods, and not farm income valuations.
The Ohio Farmers Union originally led the effort for the CAUV program back in the 1970s with first the passage of “use value” legislation in the General Assembly that was declared unconstitutional by the Ohio Supreme Court.
“This then led to the effort for the CAUV constitutional amendment that was approved overwhelmingly by the state’s voters in 1973,” according to Joe Logan, president of the Ohio Farmers Union. “Our main goal is to preserve the integrity of the CAUV program and to correct some of the problems in the formula that have been festering the last few years.”
OFU also has endorsed the petition drive of Ohio Farmers United which calls not only for relief on the skyrocketing CAUV values, but also requests the governor and the General Assembly to reverse the recent action taken in the state budget that repealed the 10% rollback, the 2.5% residential reduction, and restricted the homestead exemption.
“The CAUV was born out of political turmoil over unfair real estate tax increases back in the early 1970s. I know because I was there,” Finnarn said.
It was a part of a promise made to farmers and rural taxpayers when the state income tax was enacted; along with the property tax relief measures of the percentage reductions and the broadening of the homestead exemption,” Finnarn said.
“Farmers cannot continue to be productive in Ohio and be expected to feed the world, if they are taxed out of existence,” Finnarn said.
So true. It is so frustrating to be hit with tax increases when land values and prices for grain are going down. I feel like our present Ohio government wants to eliminate farming from the State of ohio.