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A plan by legislative Republicans to give a tax break to farmers would mean higher property taxes for Ohio homeowners and less revenues for schools.
According to an analysis of proposed farmland value changes in the new two-year state budget, Ohio homeowners face more than $60 million in unvoted property tax increases, while schools could face a loss of $58 million in state and local tax revenue,
That comes as 439 school districts would see either state funding cuts, or increases of less than 1 percent per year under the proposed budget.
GOP leaders want to give a break to farmers who faced significant property tax increases due to rising values. But because of how property taxes work in Ohio, lowering farm values means homeowners in more than 500 school districts would see the tax burden shift to them for levies already in place.
The plan would lower agricultural land values by roughly 30 percent through a change to the Current Agricultural Use Value, or CAUV. The complex formula reduces the taxable value of farmland -- currently less than 55 percent of market value -- by using an "agricultural use" value rather than a "fair market" value.
"Really what we're looking for is to make sure this formula is accurate," said Leah Curtis, policy counsel for the Ohio Farm Bureau. "There are portions of the formula that need to be more tied to the farm economy ... so farmers have an accurate property value like everyone else does."
But in Ohio, reducing farm values has consequences.
According to Howard Fleeter, analyst with the Ohio Education Policy Institute, in 65 school districts with high concentrations of farmland, homeowners would see property tax rates rise between 2.5 mills and 5 mills.
For another 130 districts, residential taxes would rise 1 mill to 2.5 mills.
Homeowners in Portage County would see increases from a high of .51 mill for homeowners in the Waterloo School District to a low of .02 mill for homeowners in the Aurora School District. Ravenna schools would increase 0.12 mill and Kent 0.03.
A 2-mill increase would cost $70 per year for every $100,000 of property value.
"Overall, spread out across the state, we're not talking about a significant amount of money," said Senate President Larry Obhof, R-Medina. "But for agricultural landowners, we're talking about a 100 percent increase every three years. We're going to put a stop to that."
But critics of the change say it's already stopped. Fleeter, who has noted that past CAUV increases coincided with rising crop prices, said state data shows the average CAUV per acre has fallen from its peak of $1,668 in 2014, to $1,249 in 2017.
Districts with little or no farmland also would be negatively impacted by reduced farmland values, said Barbara Shaner of the Ohio Association of School Business Officials.
If farm values are artificially lowered, urban and suburban districts will look wealthier under the school-funding formula. Generally the wealthier your district is compared to statewide property and income averages, the less the state pays per pupil.
Fleeter estimates it could eventually impact state funding for about 300 districts.
"At a time when state resources are tight, we urge you to remove the CAUV provisions from the bill so local taxpayers and school districts will not be negatively impacted even further," Shaner told a Senate committee this week.
Obhof said the only question is exactly how the value reduction will occur -- for example, the House proposed a six-year phase in, while the Senate proposed three years.
A key change, Curtis said, would tie the CAUV's capitalization rate more to the agricultural market, rather than the broader financial market. Farmland values, she said, jumped 300 percent from 2008 to 2014.
"It's not an increase you can budget or plan for," Curtis said.
The Senate is expected to vote on the budget next week. The House and Senate will try to work out their differences by June 30, the end of the fiscal year.
Well if the state would quit re assessing the property every two years so that can artificially increase the value upon which the tax is based, just so they can get more tax money, we would not have a problem. The state forces the county to hire a firm to reassess the market value of all the property. They do this knowing full well that the firm hires will increase the value so as to the the contract again. This allows the state and local government to get more money because the taxes are based upon the market value of the property. Increase the market value and you automatically increase the amount of taxes collected. This increase is based entirely upon what a house of similar size sold for. It does not take into consideration the condition of the neighbor hood or the condition of the house.We need to have a law that makes the company doing the appraisal have to buy the property for what they appraised it at, if the owner wants to sell. That would insure a much fairer appraisal and decrease inflation. The only true way to appraise the property is for what a buyer is willing to pay for it. The taxes should be based only on what the owner paid for the property and not increase or decrase until it changes owners. Also, why should only farmers receive specially treatmen A business gives jobs and if it goes out of business the workers lose their jobs. So no matter what the property is used for, it is a necessity. The necessity is not only for the farmers.
Bottomline, things were fine before the legislators in Columbus began monkeying with the status quo and now it's coming back around to bite those who Columbus is already increasing the burden on. And, they're elected why?