COLUMBUS—State Representative Brian Hill (R-Zanesville) announced that the Ohio House plans to update the Current Agricultural Use Valuation (CAUV) formula used to calculate the property taxes of farmland in Ohio.
Under Substitute House Bill 49, the main operating budget for the state, changes to the CAUV would be made in order to help alleviate the property tax burden that has left many farm owners struggling to pay their taxes.
“I’m happy that my colleagues in the House have heard and responded to the needs of Ohio’s farmers. Over the past couple years, I have spent much of my time working to address this issue and find a solution for farmers across the state,” Hill said. “I am pleased to see the House take a step toward fixing this issue for the agricultural community.”
The CAUV appraisal takes into consideration a number a factors, including soil productivity, crop yield, capitalization rate, non-land production and more. The productivity of each soil type is determined in three-year cycles.
As proposed, the legislation requires the CAUV formula to use a capitalization rate according to numbers published by the US Department of Agriculture (USDA) on the average rate of return for farm equity over 25 years. This means that the calculation of a farm’s property tax will be based on more consistent numbers and will be less susceptible to drastic changes.
Although the new plan would be gradually phased in over six years, beginning in 2017 the first three-year soil valuation cycle for each county will calculate the value under the old and new formulas, and will reduce the difference between those two values by half to find the new valuation. This calculation will provide tax relief more urgently.
Additionally, any land set aside for conservation purposes will be valued at the lowest possible soil value and a ceiling will be placed on the taxable value of that land.
“By using the numbers provided by the USDA averaging over 25 years, farmers will begin to see a much steadier value on their property tax bill,” stated Hill. “While it will take several years for the new plan to be fully in effect, the new three-year cycle calculation will stop the values from continuing on their upward trajectory.”
When it was first introduced in the 1970’s, the goal of the CAUV was to reduce property taxes to help farmers afford their land so they did not feel pressure to sell to commercial developers. However, as the valuations factored into the formula have fluctuated over the years, many farmers have seen their tax rate more than double.
The CAUV proposal, as contained in the substitute bill, awaits full House approval before going to the Ohio Senate for further consideration.
In response to the next steps for the legislation, Hill said, “My hope is that my colleagues in the Senate and Governor Kasich will agree that it is time to reform CAUV and support Ohio’s farmers.”