DARKE COUNTY - Farmers across the county and Ohio are banding together to form Ohio Farmers United Against Unfair Taxation in response to the impending increase of the Current Agricultural Use Value (CAUV), the formula used to determine real estate taxes for farmers at a reasonable rate.
Ted Finnarn, an attorney from Darke County who has served as the Darke County representative for the Ohio Farmers Union on the agricultural advisory committee to the Ohio State Tax Department’s Division of Tax Equalization, which handles all real estate tax matters in Ohio, since its inception in 1976, said the formula that determines the CAUV has been affected by artificially low interest rates, and some farmers could see increases of as much as 150 percent on their 2014 taxes.
“I helped develop the formula, but the last three years, I’ve spoken against the values that we’ve determined…I feel in the formula, the interest rate they’ve used to capitalize the values has been artificially low due to what the Federal Reserve has done the last few years, called quantitative easing, or QE, where they buy all kinds of bonds to keep interest rates low, so basically their rate has been almost zero, and that has kept the economy going, but they’re now starting to pull out of that somewhat,” Finnarn said. “The CAUV is based on the income method of valuing property, not based on fair market value. Sales value, or fair market value, has nothing to do with the valuation of farmland in Ohio…it’s about the value of the use of the land.”
According to a fact sheet from the Ohio State University Extension, CAUV is a “differential real estate tax assessment program which affords owners of farmland the opportunity to have their parcels taxed according to their value in agriculture, rather than full market value.” This began in the 1970s, Finnarn said, as a promise, and now that promise has been broken.
“There was a promise in 1970, there was a significant election in Ohio, and people were upset with too much property tax…There was a promise made by the governor, and the Ohio legislature, that if Ohioans allowed a state income tax, they would cut local property taxes,” Finnarn explained. “The state income tax would be used to get money to the schools, and schools would get less money from local governments. And they did, they enacted a state income tax and changed that. We got the 10 percent rollback, then we got the 2 1/2 percent rollback a few years later.”
In 1973, Ohioans got the Homestead Exemption, allowing low-income Ohioans over age 65, as well as permanently and totally disabled Ohioans, to lower their property tax bills by “shielding some of the market value of their homes from taxation,” but that’s also been changed by Governor John Kasich’s administration, Finnarn stated.
“The problem we’re going to have in Darke County…Governor Kasich, when he balanced the budget last year, he took away the 10 percent rollback, plus he took away the 2 1/2 percent rollback, and then he changed the Homestead Exemption so that fewer people qualified,” Finnarn said. “There are a lot of our farmers approaching age 65, and under the present Homestead Exemption, as changed by Gov. Kasich, they’re not going to qualify.”
Ohio Farmers United Against Unfair Taxation have started a petition, calling on the governor to take immediate administrative action to modify the formula using the “Rule of Three,” using a three-year average on any increases in the CAUV, and capping those increases at 50 percent, Finnarn explained.
“What we’re saying, is basically there’s a promise that’s been broken,” Finnarn stated. “This promise was made back in the 70s, and it worked - we got a state income tax, we got property tax relief, that lasted for over 40 years, and now the governor’s going back, and we say he broke the promise with the budget he came up with last year.”
The petition also requests that the property tax rollbacks be reinstated.
“We’re calling on the Ohio General Assembly to go back and restore the 10 percent rollback, the 2 1/2 percent rollback and the Homestead Exemption to what it was,” Finnarn continued. “What the governor’s done, sure he’s balanced the budget, but he balanced it by shifting the burden back to the local governments, he cut funds to counties, townships, libraries, and all to say he balanced the budget. He had a tiny income tax cut, but we did an analysis, and a typical farmer may have picked up about $50 with that income tax cut, but they’re about to have property tax increases of almost $5,000…so for the governor to say he cut taxes, well, we say that’s a bunch of bologna.”
A third request in the petition is a fail-safe of sorts, Finnarn said.
“At least, if they don’t do anything else, we would call for an act of legislation that would, when someone is hit with a tax increase of more than 50 percent, they’d be able to make payments on it without interest or penalties,” Finnarn commented.
Following the passage of the governor’s mid-biennial budget last year, Finnarn said county auditors began posting signs letting the public know that it was their representatives in the legislature, and their governor, who ultimately made the call.
“People are starting to realize what went on now, and they’re getting upset,” Finnarn observed. “Farmers, traditionally in this area, have been conservatives, a lot of them Republicans, but if they get upset in the pocketbook, party isn’t going to matter.”