Ohio now ranks third in the nation in high farmland taxes, only behind Indiana and Nebraska. If one looks at the "net income" of the Ohio agriculture industry, it would no longer be classified as first in the state. Rural taxpayers have seen their property tax bills skyrocket with increases of 300 to 800 percent from 2009-2016. This is due to unprecedented increases in the CAUV (Current Agricultural Use Value), which is used to value farm and woodland for tax purposes in Ohio.
The CAUV was implemented, back in 1973, as a constitutional amendment with legislation and regulations thereafter, mainly as a political response to farmers’ increased property taxes — which at that time went mainly to fund the public schools. In the early 1970s, there was a “grand bargain” with the enactment of the state’s first graduated income tax, along with property tax relief measures including the 10-percent rollback, later the 2.5-percent residential reduction, the broadening of the Homestead Exemption, and enactment of the CAUV.
This promise to reduce local property taxes and alleviate the school funding crisis in the 1970s worked well for over 40 years, but unfortunately that promise has been broken. The governor and Ohio General Assembly in 2013 eliminated the 10-percent rollback, the 2.5-percent reduction and the Homestead Exemptions was modified with strict income limitations so that most rural taxpayers would no longer qualify.
Also, to go along with this, for several reasons, the CAUV values skyrocketed due mainly to the extremely low interest rates pursued by the Federal Reserve that found their way into the CAUV’s use value formula.
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This has resulted in a massive tax burden switch (estimated to be over $2 billion) onto the backs of Ohio farmers. Thus, we are back where we were almost 45 years ago, with an over-reliance on local property taxes to fund Ohio education. This situation has been ruled unconstitutional at least four times in the DeRolph Ohio Supreme Court decisions.
Since most local property taxes go to fund schools, the reverse tradeoff now in revenue amounts to the schools receiving less from the state through the reduced income tax and more from local real property taxes. The promise has been broken.
Rural taxpayers, especially farmers, are not stupid — and a farm protest has been sweeping across Ohio like the fall harvest to come. Petitions are being circulated to remedy the tax burden switch at the behest of Ohio Farmers United, a loose coalition of farmers, woodland owners and residential taxpayers.
Hopefully, the current General Assembly and Gov. Kasich will honor Agriculture Day here in Ohio this year and respond to these protests by passing corrective legislation that has been introduced in the state legislature. If not, rural school districts in particular will suffer and not be able to pass their tax levies, even their renewals, as farm and woodland owners organize to defeat them. Sad Ag Day in Ohio — 2017.
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Ted Finnarn is a Darke County Attorney and farmland owner who has represented Ohio Farmers Union on the CAUV Advisory Committee to the state Tax Department for 41 years.
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