Study Committee 'Unlikely' To Address Farmland Property Taxes Until 2016 Session

Oct 14, 2015

Credit David Cornwell / https://www.flickr.com/photos/dave_cornwell/14959884063

Legislators are struggling to control rising property taxes on farmland. Farmland is taxed not on what it would be worth to someone else, but its productivity as farmland.

But Purdue agricultural economist Larry DeBoer says those assessments are four years out of date -- the state delayed assessments by two years after the Supreme Court threw out the old system in 1998, and has never caught up.

And DeBoer says the state uses a six-year rolling average, after excluding the highest-valued year from the calculations. That means it'll be a few more years before pumped-up values from strong crops as far back as eight years ago drop out of the formula.

DeBoer says the formula used to calculate farmland productivity has guaranteed rising property taxes the last few years.

“From about 2006-2007 through about 2012-2013, the prices of corn and the prices of soybeans went way up,” DeBoer says. “At the same time, because of the recession and the Federal Reserve’s response to the recession, interest rates came way down.”

Senate Tax and Fiscal Policy Chairman Brandt Hershman (R-Buck Creek) says the lag means assessments are up 18-percent, even though flooding wiped out many farmers’ crops this year – limiting their ability to recoup their costs.

“I know of some farmers who replanted this year five separate times and are seeing corn yields of less than 55 bushels an acre, which, in many cases, could be upwards of 200 in a normal year,” Hershman says.

Legislators have temporarily frozen soil productivity factors the last two years to slow down double-digit tax increases.

A legislative study committee, which Hershman chairs, is reviewing the issue, but Hershman acknowledges the problem is so complex that the committee is unlikely to issue any recommendations before the full General Assembly convenes in January.