For months, Ohio Farm Bureau members and staff have researched the Current Agricultural Use Value (CAUV) formula to see if changes could be made to provide relief for landowners and protect the program’s integrity. They met with tax experts, state and local tax officials, accountants, attorneys, appraisers, farmers, landowners and other stakeholders.
All that work was acknowledged March 5 when the Ohio Department of Taxation announced it was accepting all of OFBF’s recommended changes: more closely tie tax values to current economic conditions in agriculture; include more recent data on crop mix, prices, yields and production costs, and better represent the true value of woodlands compared to cropland.
As an example, OFBF projects 2015 calculated cropland valuations will be 26 percent lower and woodland valuations will be 54 percent lower than previously projected for Ohio’s most prominent soil type (Miami silt loam). Part of the CAUV formula is based on soil type, which reflects the land’s productive capacity. Ohio has are more than 3,500 soil types.
The CAUV formula changes were announced during a special meeting of the tax department’s Agricultural Advisory Committee, which noted the changes will not require statutory or code changes. During the meeting, OFBF raised further concerns about the CAUV formula, including discussing nonfarm factors that currently affect the value of land for farming.
While Ohio Farm Bureau constantly reviews CAUV, the organization last year decided to do an extensive review of the program after there was an unprecedented situation of tax bills spiking while farm incomes dropped dramatically.
The changes go into effect this year, affecting taxes paid in 2016 for counties going through a reassessment in 2015. At this time, the law allows for wholesale changes in property value only at the six-year reappraisal and triennial update, said Leah Curtis, OFBF’s director of agricultural law.
“We are looking into the possibility of applying the updated formula to the most recently reassessed counties outside of that schedule but also want to ensure there are no unintended consequences, particularly for the counties reassessed in 2014,” she said.
She noted that the projected reductions apply only to the valuation and not to the overall tax amount, which is also affected by local millage rates and other factors. While tax bills will likely be higher, this formula change will moderate the amount of increase.