by: Whitney Downard
Indiana Capital Chronicle
A proposal to reconfigure the calculation for farmland property values was a concern for lawmakers last Wednesday due to its price tag— despite being a priority of the newly inaugurated Gov. Mike Braun.
The bill was held for further consideration without a vote.
Author Rep. Kendell Culp said base rates for the farmland tax class rose by 63% over the last three years, higher than any other group. The Rensselaer Republican, a fourth-generation farmer, said that taxes were increasing even as the agricultural economy trended downward.
“I can tell you that this is not a good time to farm,” Culp told committee members.
Farmers would pay $33.2 million less in 2027 and $34 million less in 2028, the first two years under the proposed rate, according to the bill’s fiscal note. Hits to individual counties would vary.
Currently, farmland property taxes are calculated by taking the last six years of assessed value and dropping the highest and averaging the remaining five years. Part of the calculation also considers the price of crops farmers receive. Culp’s bill would drop a second year and increase the capitalization rate from 8% to 10%.
“Agriculture is the economic driver of most of these rural counties, but I can confidently say that non-farmland property owners cannot bear the brunt of increased taxes to meet the needs of their county,” Culp said. “The county either needs to expand their unit’s tax base by welcoming new investments and new developments, or spread the tax burden over a larger number of their citizens, not just property owners.”
Other legislators expressed concerns about narrowing the tax base and shifting the burden from one group at the expense of another. Cuts in property taxes— farmland property or not— could mean relying more heavily on business or sales taxes.
“I’m struggling for a solution,” Rep. Ed DeLaney told Culp. “You’re going to affect all the schools, sheriffs’ departments and everyone else. Or you’re going to shift the tax to the probably modest— and not well off— populations of these counties.”
“If we’re not taxing the farmers, who are we taxing?”
Other members of the committee said they preferred to identify a long-term solution for property taxes, rather than a “Band-Aid.” Lawmakers have made several, smaller tweaks in recent years as taxes for homeowners skyrocketed following the economic turbulence of COVID-19 and escalating prices of homes.