New calculations for property taxes on Indiana farmland will be delayed for another year under a bill that on Wednesday became the first to be signed into law by Gov. Mike Pence.
The measure — the first to reach the governor — unanimously cleared both the House and Senate in the past month in order to beat a March 1 deadline for when local assessors were to start using updated soil quality figures to determine tax bills for agricultural lands. Those changes were projected to lead to an average 25 percent increase in tax payments for farm owners.
Pence, who took office Jan. 14, signed the bill during a ceremony in his Statehouse office in front of a couple dozen farmers and legislative sponsors.
Pence said the proposal allows for "lowering taxes" on Indiana farmers, although the new calculations haven't been put into effect — and were also delayed by the Legislature during the 2012 session.
The bill requires the state Department of Local Government Finance and Purdue University agriculture researchers to prepare a review of the soil productivity measurement for the Legislature to consider next year.
Pence and others said it was important to head off the estimated $57 million increase in property taxes for the roughly 62,000 farms in the state.
The governor said the bill is important because it will help keep Indiana farms competitive and allow the state to "avoid an unnecessary tax increase by the imposition of an assessment that doesn't take in the unique challenges that Hoosier agriculture faces."
Assessors use the soil productivity measurement from the U.S. Department of Agriculture as one of the factors in determining the property tax bills for agricultural land.
The higher bills for farmers wouldn't mean greater overall tax collections for local governments, as the bills for other property such as residential, commercial and industrial would go down by a similar amount, said Rep. Robert Cherry, one of the farmland tax delay's sponsors.
Cherry said it was important for state officials to understand the changes in farmland tax assessment before farm owners see such a big increase.
"It's not favoring one sector," said Cherry, R-Greenfield. "All we're doing is to make sure we do it right before the shift happens, because the worst thing would be to do it and end up in a lawsuit or with wrong information."
Randy Kron, vice president of the Indiana Farm Bureau, said the organization believes the soil quality information is flawed and that having it studied more closely is among its top priorities.
"If it needs updating, it should go through the right authorities and the right people," said Kron, who farms about 2,000 acres near Evansville. "I think they'll find out, most likely, that there does not need to be a change to the factors right now."