For Immediate Release
May 13, 2015
COLUMBUS, Ohio (OFBF) – Ohio Farm Bureau Federation (OFBF) has offered a second set of recommended changes to the state’s Current Agricultural Use Valuation (CAUV) program, which should result in more accurate valuations that reflect the current economic conditions faced by landowners. An additional benefit should be to encourage more participation in conservation practices and programs.
The changes to the CAUV formula were proposed in a letter to the Ohio Department of Taxation and can be taken administratively without the need for new legislation.
In its recommendations, Farm Bureau challenged two inaccurate assumptions in the current capitalization rate portion of the CAUV formula: that land is a short-term investment and that it becomes more valuable as its mortgage is paid down.
The current formula assumes land is held for only five years when in reality farmland is typically held for decades and often across multiple generations. The formula also now assumes land is more valuable as its debt is reduced, but Farm Bureau argues that land values are a function of productive capacity regardless of the level of owner equity. Both changes would lessen the impact of nonfarm market forces on the capitalization rate.
Another proposal asks that all lands in federal conservation programs or other lands managed under year-round conservation practices be valued at the lowest possible rate.
Currently, farmers are discouraged from idling land because it is taxed as though it was producing crops. Farm Bureau believes taxing conservation lands at the CAUV minimum value is appropriate because conservation lands are nonproducing. This also supports farmers who take steps to protect the environment and water quality.
Farm Bureau is also asking the Tax Department to take additional steps to further reflect the lower value of woodlands compared to crop ground.
This is Farm Bureau’s second set of recommendations on ways to improve the CAUV formula. In March, the Tax Department enacted several of the organization’s previous recommendations. OFBF thanked Tax Commissioner Joe Testa and his staff for their willingness to consider Farm Bureau’s views.
Ohio Farm Bureau’s ongoing study of the CAUV formula has included extensive effort by volunteers and staff who have obtained input from numerous tax policy experts. The organization believes CAUV is Ohio’s most effective tool for preserving farmland. The goal of its study is to identify adjustments to the formula that provide fairness and accuracy while protecting the integrity of the program.
CONTACT: Joe Cornely
PHONE: (614) 246-8230
E-MAIL: [email protected]
About CAUV: CAUV is Ohio’s most effective tool for preserving farmland. Under the program, farmland is taxed on its agricultural productivity rather than its development value. The formula is highly complex and incorporates factors such as soil type, cropping history, crop prices, yields, non-land production costs and interest rates.