Farm Bureau voices heard at the Statehouse
Farmers, Farm Bureau staff members and government officials gather at the Statehouse April 8 to celebrate the ceremonial signing of SB 308, a bill that provides historic and substantial property tax relief for Hoosier farmers. Photo by Jamie Sanger for Indiana Farm Bureau
Advocacy by the Numbers
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bill for farmland property tax relief 84 counties visited the Statehouse 137 total Statehouse visits by counties 777 INFB members at the Statehouse 1,970 action alert contacts I
SB 308 Formula fix means historic tax relief for Hoosier farmers —By Jay A. Wood Public Relations Team Farmland taxes have increased 63 percent since 2007, more than any other class of property, and this at a time when farm crop income declined 30 percent in 2014 and 35 percent in 2015. Corn and soybean prices are predicted to be low for the foreseeable future, and therefore it was easy to see that Hoosier farm families needed immediate farmland tax relief. “Last year, the General Assem-
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bly passed legislation to stop the bleeding, avoiding yet another 16.5 percent farmland property tax increase,” said Katrina Hall, INFB’s director of state government relations. “Farmers appreciated the help, but what they really needed was a long-term solution to the problem. We are so grateful that the legislature agreed.” The long-term solution was a fix to the farmland tax formula. This year, Sens. Brandt Hershman, R-Buck Creek, and Eric Bassler, R-Washington, responded by authoring SB 308. In its final ver-
sion, the bill: • Matches the base value more closely with a farmer’s ability to pay by reducing the time lag in net income data used in the formula from four years to two years. • Puts the issue of soil productivity factors to rest by freezing them at the 2011 levels. • Includes statutory cap rates (ranging from 6 percent to 8 percent) that are triggered by how much the farmland formula increases or decreases. Reps. Tim Brown, R-Crawfords-
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ville, Don Lehe, R-Brookston, Bob Cherry, R-Greenfield, and Jeff Thompson, R-Lizton, sponsored the bill in the House. Since the farmland tax burden on any parcel of land is primarily impacted by its base value, the goal of SB 308 was to fix the farmland tax formula so that base values will no longer rapidly increase and cause corresponding tax hikes. All property in Indiana is valued for property tax purposes at a market value-in-use standard, a common assessing practice.
Forty-six states assess farmland in some form of “use” value, and most (including Indiana) use an income capitalization formula. “Prior to this year’s reform package, Indiana’s farmland base value formula averaged the lowest five of six years’ net income
from corn and soybeans, and then divided them by a capitalization rate,” said Hall. “Until now, there has been a four-year lag in the net income data used, which caused a mismatch of actual farm income and farmland taxes.” Because crop incomes were
much lower in 2014 and 2015, the comparatively high crop incomes of previous years were causing higher tax bills now when farm profits are low or farms are operating at a loss. SB 308 reduces that four-year lag in net income data used in the formula to a two-year delay. The use of more current data helps assure that farmland taxes are not so far out of sync with farm income. Also under the new law, the average net income from corn and soybeans will be divided by statutory cap rates ranging from 6 to 8 percent. A statutory cap rate is needed to achieve lower and stable farmland assessments. The higher the cap rate, the lower the tax burden to the farmer. SB 308’s original version included an 8 percent cap rate, but that provision was removed in the House until the conference com-
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mittee compromise. Thanks to the advocacy of Farm Bureau’s strong grassroots network, lawmakers in both chambers agreed to the 6- to 8-percent range. The final component of this long-term relief was the freezing of soil productivity factors at their 2011 levels. The General Assembly will no longer need to enact one-year halts, as it has done every year since 2012. In all, SB 308 brings historic property tax relief, Hall said. INFB members should be extremely proud of their effort to make it happen. Farmers found their voice with Farm Bureau at the Statehouse, and the results were amazing.
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HB 1001 The route to local road funding —By Jay A. Wood Public Relations Team Finding a solution to Indiana’s transportation and infrastructure needs has been an ongoing discussion for at least the past five years. In 2014, the General Assembly allowed the state budget agency to transfer up to $400 million in the Major Moves 2020 Trust Fund to the Major Moves Construction Fund for state construction projects. That transfer put Indiana in position to leverage more than $1.6 billion in federal funds to
support construction projects on state highways. “While funding for state highways is important, it is just as critical for Hoosier farmers to have well-maintained county roads,” said INFB’s Katrina Hall. “Farmers rely on the use of country roads to transport their grain, livestock and equipment to and from their barns, fields and local grain elevators.” That sentiment was reflected in INFB state policy this year. Section 609.01 says, “Priority use of transportation dollars should be for maintenance and upgrades of
county roads.” It also expresses support for the concept of a datadriven solution for long-term road funding. Taking direction from the grassroots-developed policy positions, road funding was included in Farm Bureau’s legislative priorities this session. “For the last two years, INFB members made it clear that they were willing to pay for increased funding for roads, particularly county roads,” said Hall. “We were very fortunate that all four caucuses also placed a premium on finding a road funding solution this year.” HB 1001, authored by Rep. Ed Soliday, R-Valparaiso, and sponsored by Sen. Luke Kenley, R-Noblesville, was among a host of road funding proposals that INFB supported this session. Farm Bureau was particularly keen on this legislation because it matched closest to INFB state policy. HB 1001 provides much needed funds and tools for local roads by: • Tapping excess reserves. • Establishing local options (e.g. wheel and surtax) and matching grants. • Redirecting an additional 1.5 cent gas sales tax to roads and
bridges to be allocated to local units in a grant program. • Releasing funds the state now holds in trust for local government (75 percent must be used for roads and bridges). • Allocating $42 million for the Regional Cities program. • Redirecting $100 million for INDOT to use for preservation and maintenance. • Establishing the Funding Indiana’s Road for Stronger, Safer Tomorrow Task Force. • Appropriating $500,000 for the Local Technical Assistance Program to study and assist local governments with transportation asset management plans. Even with the passage of HB 1001, the discussion about transportation and infrastructure needs is far from over. As the 2016 session ended, leadership in both houses made the commitment that they will return to this issue next year to craft longterm, sustainable road funding solutions that include “revenue enhancements,” also known as tax and user fee increases. Farm Bureau will be a key player in shaping the outcome of those solutions.
Find your voice by becoming a member of Indiana Farm Bureau. To find out more about membership, call your local Indiana Farm Bureau office, or visit INFB’s membership site, www.itpaystobeamember.org. WWW.ITPAYSTOBEAMEMBER.ORG IV
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