Farm Bureau strongly opposes increase in farmland property tax assessments
Dec 22, 2005 | Headline News |
The Missouri Farm Bureau urged the Missouri State Tax Commission not to increase the farmland productivity values used for property tax assessments for 2007 and 2008. According to state law, the productivity values are to be reexamined every two years and "…shall be based upon soil surveys, soil productivity indexes, production costs, crop yields, appropriate capitalization rates and any other pertinent factors…"
Farmland is divided into eight grades determined by soil conditions. Each soil grade is assigned a dollar value which is to reflect the use-value of the soil grade as farmland. The use-values are then used to determine the appropriate property taxes to be levied on the farmland.
Charles E. Kruse, president of Missouri Farm Bureau, wrote in a letter to the Commission, "On behalf of Missouri Farm Bureau, I am writing to urge you to recommend no change in farmland productivity values this year. If any change is considered, we believe there is stronger evidence to support lowering rather than raising productivity values."
"Weather, input costs and commodity prices have made 2005 one of the least productive years on record for Missouri farmers and ranchers. Rising costs for inputs, especially energy and fertilizer, have cut productivity substantially. Gasoline, diesel, electricity and natural gas are all vital to agricultural production, and fertilizer derived from petroleum products or natural gas multiplies these input costs," Kruse stated.
Farmland property tax assessments would increase by about 50% if the new use-values presented by a University of Missouri study were adopted. But the formula used in the University’s study, that relies heavily upon the trend of cash rental rates for farmland, has come under considerable criticism of failing to truly reflect the productivity value of farming.
At Farm Bureau’s recently completed annual meeting, the voting delegates adopted a policy which states, "We are concerned that the University of Missouri’s study, used by the State Tax Commission to determine changes in the use-values of the eight soil grades, does not truly reflect the actual productivity and profitability of agricultural land because it relies heavily on the changes in cropland and pasture land cash rental rates."
Kruse further states in his letter, "In years past a more complex formula that accounted for a more comprehensive set of variables was used. Expediency for the sake of convenience is not conducive to incorporating the many different variables that comprise productivity values. We believe the current formula oversimplifies the process of determining productivity values and does not serve the intended purpose. In other words, the formula used today has been whittled down to the point that there is good reason to question the credibility of the results. Before the commission considers changing productivity values, the formula should be modified or an alternative methodology adopted.
"Faced with lower productivity, Missouri’s farmers and ranchers should not be asked to pay higher taxes on farmland. We firmly believe that the most appropriate course of action for the Commission to take this year is to keep current productivity values in effect and initiate an effort to improve the formula. We urge the Commission to take this action and stand ready to work with the Commission on this effort," Kruse said.
