The Indiana Senate unanimously passed legislation Monday that would give farmers a big break but shift the tax burden to other property owners while cutting revenue to local government.
Senate Bill 308, which is now headed to the House for consideration, would reduce the total assessed value on agricultural land by an estimated $4.2 billion for taxes paid in 2018 and $8.9 billion for 2019.
That will cut the property taxes actually paid by farmers by nearly $50 million in 2018 alone, said the bill’s author, Sen. Brandt Hershman, R-Buck Creek.
“Agriculture is a vital part of Indiana’s economy,” Hershman said in a statement. “It is important that the legislature take steps to continue supporting this industry and the jobs it provides to Hoosiers across the state.”
The bill attacks a complex formula used to determine agricultural assessed values. It eliminates the use of the U.S. Department of Agriculture’s new soil productivity factors, changes the formula to limit annual increases in assessed value and uses the most recent data available to determine the base rate for assessing property taxes on farmland.
That base rate has more than doubled since 2007, resulting in a 47 percent increase in agricultural property taxes, said Purdue University professor Larry DeBoer. But that comes as farm incomes were expected to decline 36 percent in 2015, to the lowest level in nine years, according to the U.S. Department of Agriculture.
Reducing assessed values for farmers, however, shifts tax burden to other property owners, although the impact will vary significantly by county and even taxing district. In addition, in places where tax bills have been limited by tax caps, the change will reduce revenues to local governments.