Randy Kron is in a unique position. He's a family farmer who's also vice-president of Indiana Farm Bureau, Inc. The first career makes him as susceptible to increases in property taxes on farmland as anyone else. The second gives him a chance to hear what experts in the field say about current issues.
One expert he heard recently was Larry DeBoer, a Purdue University ag economist. DeBoer concentrates on studying taxes and their potential impact on farmers in Indiana. According to Kron, DeBoer recently stated, "Agriculture is not likely to receive much tax relief at all from the property tax credits."
Kron heard DeBoer testify at a meeting of the Indiana Commission on State Tax and Financing Policy in October. DeBoer reported on his study of property tax data from 68 of Indiana's 92 counties. Homeowners did see relief. Homestead tax bills dropped from 2007 to 2009 for 95.5% of homeowners. The average decrease was 32.5%, roughly one-third.
However, commercial, industrial and utility real property owners paid 18% more in 2009 than in 2007. Ag property taxes also increased, DeBoer says, primarily because of rising farmland assessments.
Who really benefits from the circuit breaker caps on property taxes tied to assessed value? The Legislative Services Agency did a study to try to determine the answer. Only 5% of cap savings went to homeowners. That's because they already received help from hefty homestead deductions. Rental housing and vacation homes were helped the most, getting over half the savings. Commercial, industrial and utility property captured nearly one-fourth of the credits. According to the study, all personal property accounted for nearly 15% of the savings under the cap system. The credit to farmland was 0.55, barely over one-half of one percent of all savings under the new cap system.
DeBoer recently stated that taxes on farmland could actually increase substantially moving forward if the taxation formula stays the same. It's the method used to determine the value of average bare farmland in Indiana, and it's tied to prices of grains and inputs over a six-year period. DeBoer predicts that the 2% cap won't help farmers because of their rural locations and rising farmland assessments.
Kron gets to the bottom line. "The unequal property tax caps proposed for the state constitution are still not equitable for farm properties," he concludes.