Will Legislature Address Farmland Property Tax Issue?

Without legislation, assessed value will go even higher in 2013.

Published on: Dec 12, 2012

Katrina Hall and lobbyists for Indiana Farm Bureau stopped an end-run by the Department of Local Government and Finance last February that would have meant you would be paying higher property taxes on farmland that even what the increasing formula says you should pay. Hall says stopping the action save Indiana landowners $57 million.

The problem is that without legislative action, the proposal by DLGF will kick in for 2013, and assessed value will go higher than it would otherwise for taxes payable in 2014. While no bill has been drafted yet, Hall is confident that the legislature will address the issue.

One of the chief planks of the strategy laid out by candidate Pence before election as governor was to review property taxes, especially as they affected agriculture, to make sure that Indiana agriculture was in a competitive position with surrounding states. That could mean even more adjustment than adjusting or stopping the proposed change by DLGF.

Hold the line: Katrina Hall is one of the people at Indiana Farm Bureau, Inc., that attempts to inform legislators why farmland assessed values should be kept in check or lowered.
Hold the line: Katrina Hall is one of the people at Indiana Farm Bureau, Inc., that attempts to inform legislators why farmland assessed values should be kept in check or lowered.

Hall and Don Villwock, president of Indiana Farm Bureau, Inc., testified at a legislative hearing for a study committee earlier this fall. Hall testified at a second hearing which involved key players in the budget making process.

What DLGF wanted to do was raise soil productivity factors, she reports. That would have raised assessed value for bare farmland. As it is, soil productivity is a factor in the formula that determines the value of bare farmland for assessment purposes. Other factors include yield and price of corn.

While you might think the drought would impact the formula and help draw down the assessed value per acre, what happened this year won't even begin to impact the formula until 2016, Hall says. And increasing price will at least partially offset decreased yield.

Besides, in 2016, it will be only one of six years considered for the formula. The top end year is dropped out, and the others are averaged together. Base farmland value has been increasing in assessed value because farm income, especially based on better crop prices, are reflected in years that are rolling into the formula, while years with lower prices are rolling out.

This is one to keep an eye on this legislative session