By NANCY VORIS
Indiana Correspondent

INDIANAPOLIS, Ind. — It’s winter, it must be time for Indiana’s property tax debate. The Indiana Farm Bureau (IFB) is struggling against a potential blizzard of tax relief initiatives it calls “unfair.”

Property tax caps enacted by the General Assembly in 2008, the IFB claims, is discriminatory. The caps would allow residential property, farmland and business property to be capped at different levels. Local governments are experiencing the fallout of the tax caps at the same time legislators are trying to amend the Indiana Constitution to incorporate the tax caps.

While the resolution may appeal to average homeowners who would not have to guess about property tax bills, the IFB said the caps place an unfair burden on farmers and businesses.

“Our adversaries are making hay out of the lack of knowledge the general public has and is working that against us,” said IFB President Don Villwock. “We want them to have a little understanding if (farmers) are going to feed the world … and do the things we have to do.”

Property tax bills this year were capped at 1.5 percent of assessed value on owner-occupied residential property, rental and agricultural property at 2.5 percent, and business and personal property at 3.5 percent. The caps are to be lowered to 1 percent, 2 percent and 3 percent, respectively, in 2010.

For farmers, the 1 percent translates into their homes, the 2 percent is working farmland, and 3 percent is the outbuildings, grain bins, equipment, personal property, etc. “Our members who are most frustrated are the young farmers, whose taxes mostly fall into the 3 percent range,” said IFB Tax and Local Government Specialist Katrina Hall.

IFB policy stated there is “no justification other than ‘good politics’” for the varying tax caps. Along with the “inherent unfairness of these arbitrary caps,” the impact on the budgets of schools, cities and counties is yet to be determined in a time of economic uncertainty.

In addition to capping homeowners’ property taxes at 1 percent of assessed value, the property tax relief act of 2008 included a supplemental deduction for such property, providing additional relief to taxpayers who benefit most from tax-related services.
“Since farmland, farm personal property and other business property is not entitled to a supplemental deduction, this provision will force taxes on such property upward,” IFB policy said.

The organization acknowledges that some believe the basic standard deduction of $45,000 is justified, but the supplemental deduction of 35 percent on the first $600,000 of assessed value and an additional 25 percent of additional assessed value simply rewards extravagance and provides greater relief to those who may need it least. IFB also contests the assessment of farmland in Indiana, which is assessed by the “income approach” of determining market value. That approach assesses value not by how property is currently used but by how it can generate income in the future.

Acreage that a farmer may see as conservation land or a timber resource, an assessor will see as high-dollar development property, Villwock said. “For some older farmers, property taxes have gotten so high that they cave in to developers,” he said. “The taxes are a barrier to young farmers in the more urban counties.”

IFB proposes that the General Assembly “explore new and creative means of farmland assessment that would be based on current value-in-use rather than historical trends,” perhaps using a few key commodity price averages for the immediate year rather than the historical average.

Also on the IFB policy radar:

•Local government reorganization: Supportive of retaining the township trustee, county commissioners and county councils and opposed to county-wide control of poor relief funds and a single person as county executive.

•Animal Care: Supportive of legislation making it clear that the State Board of Animal Health clearly has the authority to establish care standards for livestock in Indiana and opposed to any efforts to incorporate specific animal care standards into the Indiana code.

•Eminent Domain: Supportive of any legislation which provides that condemnation should be considered only after all possible existing public property alternatives have been determined to be unsatisfactory.

•Drainage: Issues are best resolved locally and feels that the County Surveyor has the professional expertise to assist landowners in resolving disputes. Will oppose any legislative efforts to abridge the “common enemy rule” dealing with unchanneled rainwater in Indiana.

For more information on these issues or Indiana Farm Bureau policy, contact Bob Kraft at rkraft@infarmbureau.org or Katrina Hall at khall@infarmbureau.org