CAUV Discussion from Dept of Taxation

The method for determining farm land tax values under the Current Agricultural Use Value program could see a revamp by the end of the year, the Department of Taxation said Friday.  Any adjustments will largely respond to farmers' concerns that the values are expected to spike to unmanageable levels for taxes that are to be paid in 2015, ODT's Executive Administrator of Tax Equalization Shelley Wilson said in an interview.

The CAUV program ensures that farmland is taxed on its agricultural productivity rather than development value, which gives farmers a prime deal. But in the last few years, the equation has been thrown off by volatile crop prices, the Ohio Farm Bureau Federation said this week in outlining recommendations issued to ODT and the General Assembly.

Ohio Farmers' Union members have also brought attention to the issue through their service on a panel that advises the department on the CAUV program.  "There are a lot of farmers and landowners facing huge increases in their tax bills at the same time their incomes have fallen drastically," OFBF Executive Vice President Jack Fisher said in submitting the plan, which suggests the department consider more closely tying the valuations to current economic conditions. 

Ms. Wilson said 41 of 88 counties are due to receive new valuations for tax year 2014, which will likely result in significant increases on those tax values calculated under the CAUV program.  There will be a case of "sticker shock," she said, noting that the average value of agricultural real estate was $123 per acre in 2005 and the current average is $1,668 per acre.  However, Ms. Wilson said the CAUV program "is still providing a substantial tax savings to famers" because Ohio's farm land is valued well below the U.S. Department of Agriculture's $5,700 per acre valuation.  An option for softening a new valuation hit could be to delay the release of values by a few months in order to use the immediate past year's crop prices as opposed to crop prices from two years prior, Ms. Wilson said. Doing so would give the department a better picture of the economic situation Ohio farmers are facing.  While the department has yet to decide which of the OFBF recommendations it will move forward with, she said it "is very interested in making sure that our formula is accurate and uses the best sources of data to produce the most accurate values that reflect current trends in Ohio's agricultural economy."  Any modifications to the department's appraisal methodology could be made by January or sooner, Ms. Wilson added.  The farm bureau's recommendations, which can be implemented without legislative action or a rules process, would affect taxes paid in 2016 and beyond.