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Farm taxes dramatically rise because of flawed calculations

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A decades-old formula intended to benefit farmers come tax season is revealing its flaws as farmers’ property tax rates increase —and in some cases double — compared to those of past years.

The Current Agricultural Use Value, or CAUV, was designed by the Ohio Department of Taxation as a method of taxing farmers in a way that reflects the farming economy.

“It basically allows farmers to pay less during bad times and more during good times,” said Athens County Auditor Jill Thompson.

The formula uses values based on soil types for three crops most prevalent in Ohio — corn, wheat and soybeans — as well as crop prices averaged from the past seven years, minus the highest and lowest values. Other values included in the formula are crop yield and non-land production costs.

“If farmers are commercial crop farmers, it works,” Thompson said. “But it’s different for livestock farms and nontraditional farms. Some farms may have prime soil for those crops, but those crops aren’t growing there.”

So a farmer might have a soil type that potentially could produce high-value crops like wheat, corn and soybeans. But for farmers like Glenn Lackey, who raises cattle in addition to growing corn, hay and soybeans, those values aren’t always appropriate.

“That’s the problem,” said Lackey, who is also a board member at the Soil and Water District in The Plains. “It’s not based on what is being grown. In Athens we grow grass and trees. A lot of our soil gets taxed on corn and soybeans and wheat.”

Reappraisals and revaluations happen every three and six years, and those numbers are used in this year’s value. Lackey said the problem is the past few years have seen record highs for grain prices, and those prices are being used to calculate a rate for a year when grain prices have plummeted.

“We’re kind of really victims of circumstances with the prices of grains going down, and our tax rates going up,” Lackey said. “It’s a delayed reaction for something that happened in the past. The next appraisal, unless grain prices go back up, our rates will come back down.”

Lackey does not deny the benefits of the formula since its creation in 1972. In its 40 years, CAUV has saved farmers statewide hundreds of thousands of dollars. But he does suggest a few changes be made.

“The system we’re working with just needs some tweaking,” he said. “The system’s good, it just needs some changes made to it to keep the taxing situation fair. I think soil use is one of the things that would probably need to be taken into consideration for tax purposes.”

The Ohio Farm Bureau is already taking steps toward improving the formula.

“It’s been a wonderful program,” said Amy Milam, Director of Legal Education at Ohio Farm Bureau. “But when you have situations like this where you get extreme spikes in valuation, it’s something you have to look at.”

The process starts with breaking the formula down and assessing all the components used. Milam said a reevaluation of the formula will hopefully improve it for Ohio’s farmers.

“Don’t get me wrong… I’m not happy about paying more,” Lackey said. “We just need to make a few minor adjustments and everything will be ok.”

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