Tax study commission hears OFBF’s proposed CAUV changes

The Current Agricultural Use Value (CAUV) program was front and center in Ohio Farm Bureau’s presentation recently before the 2020 Tax Study Commission. The commission is a committee of legislators who are studying and recommending improvements to the state’s overall tax structure.

Brandon Kern, OFBF’s director of state policy, described how Farm Bureau has policy that ranks each type of tax from most palatable to least.

“Farm Bureau takes a holistic approach when viewing tax proposals. We consider the overall impact of changes to how our members are taxed along with the overall benefit to Ohio’s economy,” he said. “This policy allows Farm Bureau to support or oppose tax reform proposals that take on a number of different forms.”

Local property taxes are, by far, the largest tax payment made by farmers, which is why it’s important that the Current Agricultural Use Value (CAUV) formula accurately and fairly value farmland based on its agricultural use rather than its development potential. For more than 40 years, the program has been “extremely effective” in preserving farmland, but the accuracy of the CAUV formula could be improved, Kern said. Ohio Farm Bureau has made two sets of recommended CAUV changes that should result in more accurate valuations that reflect the current economic conditions faced by landowners and encourage more participation in conservation practices.

Those recommendations are found in two bills (House Bill 398 and Senate Bill 246) that the Ohio General Assembly is expected to start hearings on when it is back in session in January.

About 1 ½ years ago, Ohio Farm Bureau started a deeper analysis of the CAUV program in response to skyrocketing CAUV values, which have exponentially increased over the past seven years.

“The statewide average CAUV value increased 292 percent from 2008 until 2014,” Kern said. “Commodity prices haven’t come close to keeping pace with that growth. It’s clear to many of our members that something else in the formula is intensifying increases in use value.”

This is Ohio Farm Bureau’s second set of recommended changes to the CAUV program. The Ohio Department of Taxation enacted OFBF’s first round of suggested changes: to 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.