The net result of the 2008 session of the Indiana General Assembly, just concluded about 10 days ago, is still sinking in. Ag experts who analyze the impact of the property tax reform bill are still deciding what the overall impact might be on agriculture. On the surface some observers feel agriculture may have drawn the short straw.
"We wound up with something that was better than what the bills started out to be, but I don't feel it's still great for agriculture," notes Bob Kraft, Indiana Farm Bureau legislative specialist. He was one of the farm group's lobbyists who made legislators aware constantly of the need to pay attention to how reform might impact others besides regular homeowners. Nut in the end, the old cliché 'houses and land don't vote, people do,' seemed to carry the day. It's an election year, and there are far more votes from the people living in subdivisions, towns and cities compared to farmers in rural areas.
One of the problems, Kraft says,. Is that spending wasn't capped. The general fund for schools will no longer be funded by property tax, and that's a good thing, Kraft notes, but there may still be situations where government expenditures at the local level may need to be paid from property tax funds. Since homeowners got a lower cap, at 1% of assessed value of their homes, that leaves agriculture more vulnerable to excess spending and thus increases in assessed value. Farmland was capped at 2%, an improvement over the original proposal, but all other farm property was capped at 3%, the highest cap in the plan.
It also doesn't affect how farmland is assessed, Kraft adds. Assessment will still start based on the formula that includes crop prices. But this year, before the legislature even met, it was already known that land assessment was up from $880 of the past two years to a base of $1,140 per acre. Most experts expect it to go higher as the higher crop prices of the last couple years eventually roll into the formula.
Even eliminating township assessors in most counties won't solve all the problems of inconsistent assessment, Kraft believes. "One of the biggest problems with property tax wills till be assessment," he says. "Assessors just don't always get it right, and the Department of Local Government Finance hasn't saw fit to exert its authority in most cases.
"The problem is that although fewer people will be doing assessment, it's still subjective. Assessment is supposed to be an objective process, but it's just not possible the way it will still be done, even after this legislation takes effect."