Wednesday, May 27, 2015

CAUV proposed changes

 The Ohio Farm Bureau briefed members on the organization's proposed changes to the Current Agricultural Use Value program.  Brandon Kern, OFB's director of state policy, said property values of Ohio farmland have increased dramatically at the same time commodity prices tumbled, creating a "perfect storm" for the CAUV program.  OFB's proposed changes are designed to ensure a more accurate measurement of agricultural use of land, he said. With the increased focus on water quality and land management, the recommendations would eliminate certain "disincentives for preservation," he said, adding that woodland property and grass buffer strips next to waterways should be fairly treated by the CAUV program.  Leah Curtis reviewed four CAUV recommendations that OFB made to the tax commissioner last November: modernizing the capitalization rate loan term, updating the capitalization rate debt-equity split; decreasing the lag time between input data and the tax year; and increasing deductions made to woodland values to be consistent with the actual cost.  ODT implemented most of the recommended changes in March, she said.  Last month OFB sent a second set of recommendations to the tax commissioner, she said. They call for: changes to the method of calculating the capitalization rate; putting year-round conservation lands at minimum value; and increasing woodland deductions to represent current costs of clearing and drainage for those lands.

Rep. Boose asked whether ODT could implement the proposals in administrative rule or if legislation was necessary to require the agency make the changes.  Mr. Kern said OFB believes the agency has the authority to make the changes administratively and anticipated that ODT would be willing to heed the organization's suggestions. "The tax department has been an excellent partner in this process," he said.  However, legislators shouldn't rule out the possibility that legislation might be necessary if the administration proves unwilling to take action, he added.

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