School, local groups worried about legislative efforts to reform the way farmland is taxed

By MARC KOVAC

news@vindy.com

COLUMBUS

School and local groups are voicing concern about legislative efforts to reform the way farmland is taxed in Ohio.

Groups representing school boards and officials and others would rather the legislature study the current agricultural use value, or CAUV, formula and its impacts before signing off on law changes.

“We understand the impact this is having on farmers,” said Jay Smith, deputy director of the Ohio School Boards Association. He added, “But we also ... see that the CAUV formula is working and that those increases that they have seen based on economic conditions, they’re coming down. They may not be coming down as fast as farmers would like ...”

While income and sales taxes dominate the state’s general revenue fund, property taxes generally are directed into local coffers.

More than $16.8 billion in property taxes were payable last year, not including tax credits reimbursed by the state, according to the Ohio Department of Taxation. School districts had the biggest share of that total, about $10.5 billion, followed by counties with nearly $3 billion.

The proposed changes to the CAUV formula will mostly impact local governments. A fiscal analysis by the state’s Legislative Service Commission on the recently passed Senate CAUV legislation projected losses of $20 million or more for local governments and school districts after a three-year phase in period.

An LSC analysis of the House CAUV amendment in the state budget put the losses at $14 million annually after a six-year phase-in. Some of those revenue losses “would be partly offset by higher effective tax rates on residential property owners and also on farmers,” according to LSC.

The potential local losses are a rub for school and other groups, with additional concerns that the proposed CAUV reforms would lead to increases in taxes paid by residential property owners, as fixed-dollar levies designed to raise a specific revenue total are shifted to account for lower farmland tax bills.

In testimony before the Ohio Senate’s Ways and Means Committee last month, Barbara Shaner, associate executive director of the Ohio Association of School Business Officials, voiced her group’s opposition to the legislation, saying it would “significantly reduce local valuations for agricultural property” and “the resulting expansion of benefits to agriculture landowners will create a shift in tax burden ... to residential owners.”

She cited a study by the Ohio Education Policy Institute noting that residential property owners paid nearly 64 percent of total property taxes in 2015, up from about 44 percent in 1990.

Stan Dixon, a deputy tax commissioner for tax equalization for the state, told lawmakers that a review of potential impacts of proposed CAUV reforms in eight counties found that, “... property tax increases paid by residential landowners increased from minimal amounts to upwards of 10 percent in some taxing districts. The magnitude of the shift is largely driven by the ratio of agricultural property to residential property in a taxing district. Generally, the more rural the district, the larger the shift.”