Rep. Mike Henne shares this guest column with Montgomery County farmers:
Addressing the CAUV
It is no secret to many in our farming community that the property tax rate for farms, also known as the CAUV, has drastically increased over the past two years. This has had wide impact throughout Ohio’s agriculture industry; however the Ohio Legislature has been working closely with the Ohio Farm Bureau as well as the Ohio Department of Taxation to find a solution for our farmers.
First, it’s important to start with the history of this program. Starting in the 1970s, Ohio voters adopted a tax formula called the Commercial Agricultural Use Value, or CAUV. This formula significantly reduces the property tax on farmland in an effort to help farmers afford and preserve their land. By preserving as much farmland as possible, we can ensure that our farmland continues to be used to feed the nation rather than being turned into commercial real estate.
Throughout Montgomery County, many farmers have seen their property-tax bills increase in the latest round of tax collections. This is because the CAUV formula takes into consideration profits from several years back, which were much higher than the 2014 and 2015 yield. This significantly skews the average, causing the property tax rate to soar even though farmers saw a decrease in revenue in recent years.
For many in the farming industry, this was a surprise they were not able to account for and it is causing farmers to struggle to make their payments. It is clear that the legislature needs to explore the potential for adjusting the CAUV formula; however the solution involves a delicate balancing act with the residential property tax.
Currently, the law requires the Ohio Tax Commissioner to adopt a method by administrative rule that utilizes modern appraisal techniques to take into consideration: the productivity of the farm soil, the average price patterns of the crops, and the market value of the agricultural land. The Ohio Farm Bureau has worked closely with the Department of Taxation to remedy the problem. Through this work, the Department of Taxation has already implemented several changes to how the CAUV is calculated to lessen the financial burden farmers are feeling.
In addition to those changes, the Ohio House has also introduced House Bill 398, which would require that the CAUV formula cannot include both the land value and owner equity increasing, which enhances the economic value of land. The bill will also place a ceiling on the taxable value of CAUV land that is used for conservation purposes. House Bill 398 has been referred to the House Government Accountability and Oversight Committee for consideration and input from farm owners across Ohio.
While I continue to stay involved in the CAUV conversation and help to find a solution for Ohio’s largest industry, I would appreciate your input on this and all state legislative matters. Please feel free to contact my office at (614) 644-8051 or [email protected]