STATEHOUSE (Jan. 24, 2013) — State Sen. Jean Leising’s (R-Oldenburg) legislation to prevent a $57 million property tax increase on Indiana farmers passed the Senate Committee on Appropriations today with a 12-0 vote.

Leising said the ultimate goal of Senate Bill 319 is to protect farmers from higher property taxes resulting from an increase in the soil productivity factors used to assess the value of farmland.

Her bill would delay, for an additional year, the use of the soil productivity factors first proposed by the Department of Local Government Finance (DLGF) in 2012 — meaning the soil productivity factors used for the March 1, 2011, assessment date will be used once more for the March 1, 2013, assessment date. Leising said DLGF’s proposed new soil productivity factors would create a 15 to 45 percent increase on farmers’ property taxes, depending on the Indiana county of residency.

SB 319 would also require the DLGF, in cooperation with the Purdue University College of Agriculture, to submit a report to the General Assembly by Nov. 1, 2013, including:

• Proposed soil productivity factors to be used in the assessment of agricultural land.
• An explanation of the methodology used to determine the proposed soil productivity factors.
• Data from each county used to determine the proposed soil productivity factors.
• Evidence of oral testimony and written comments provided to the DLGF by taxpayers and other stakeholders concerning the proposed soil productivity factors.

“There appears to be no reason to change our factors at this time, as the base rate is calculated each year on a formula that includes cash rents, commodity prices, costs and interest rates,” Leising said. “Even without any implementation of the suggested new soil productivity factors, it’s estimated that, in 2014, the base rate will be double what it was in 2006 — leading to significant property tax hikes for farmers.”

In 2006, the agricultural land base rate — used as the foundation for determining true tax value and adjusted according to soil productivity —was $880 and is expected to be $1,760 in 2014. By 2016, it’s projected the base rate will be $2,430.

“Many landowners and farmers will find it difficult to pay these escalating property taxes,” Leising said. “It is critical that the proposed factor be delayed and further studied. This could be the most important agricultural and rural issue the legislature discusses this year.”

SB 319 now moves to the full Senate for further consideration.

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