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AROUND INDIANA
Property taxes, regulatory reform, and trespassing among IFB’s 2014 Statehouse priorities —By the IFB Statehouse Lobbying Team Again this year, the number one priority of Indiana Farm Bureau is to stop the implementation of erroneous soil productivity factors issued by the Department of Local Government Finance in February 2012. With the cooperation of the General Assembly, Indiana farmers have been spared an unjustified $54.7 million annual increase that would have occurred by implementing the factors presented to the DLGF by the U.S. Natural Resources Conservation Service. The problem is so well known that Governor Pence called for “fixing the soil productivity factors” in his State of the State address. SB 111, authored by Sen. Jean Leising, R-Oldenburg, unanimously passed out of the Senate. It is anticipated that the House will take up the measure and support it as House members have done the last two years. In the meantime, agronomists at Purdue are working to refine the results of using updated NRCS soil date through the original model that was used to determine the original factors in use since 1980. The big question of the session is “What will happen with the personal property tax”? The governor placed a priority on it in his State of the State address. Both the House and Senate passed proposals addressing the issue in the first half of the session, but that is where the common themes end. SB 1, authored by Sen. Brandt Hershman, R-Buck Creek, exempts taxpayers with $25,000 or less in personal property from property tax and does not provide replacement revenue to local governments. The bill lowers the corporate gross income tax. HB 1001, authored by Rep. Turner, R-Cicero, provides for a local option by the county income tax council to allow the elimination of new personal property in their county. This bill essentially provides a method for automatic abatement to all owners of business personal property and requires no application or approval process. While HB 1001 does not provide replacement revenue, it does allow local officials a measured first step in providing relief from personal property tax where the tax base is such that shifts would not be significant or where local officials want to create a more attractive tax climate for business development. County and city officials continue to fight both the House and Senate proposals. IFB will keep members updated on this important issue through The Dispatch (IFB’s legislative newsletter). For those who are keeping score, local government reform proposals filed on a single county executive for Allen County and consolidation of townships did not receive a hearing in the first half of the session. Farms and their economic viability are often harmed by trespassers. A remedy is needed to protect the private property rights of Indiana farmers. Removing the posting burden to enforce trespassing laws is a long-standing IFB policy. SB 101, authored by Sen. Travis Holdman, R-Markle, would do just that. Indiana farmers will not be required to post “no trespassing” signs to protect the production areas of their farms. If a trespasser commits an intentional act that causes property damage, it could result in additional penalties depending on the amount of damage caused. Furthermore, the bill adds causing property damage to an agricultural operation to the existing crime of “institutional criminal mischief.” The provisions of SB 101 provide a greater deterrent effect for those who intend harm to the property owner or his business. Another important bill is SB 186, authored by Sen. Carlin Yoder, R-Middlebury, that declares the state policy on agriculture and farmers’ rights. Indiana Farm Bureau strongly supports legislation that strengthens and reaffirms Indiana’s vision for and commitment to agriculture. The bill further states that the Indiana Code shall be construed to protect the rights of farmers to choose among all generally accepted farming and livestock production practices, including the use of ever-
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$4,000
$3,500
Farmland Assessment Base Value 2003 to 2017 Base x .5 SPF
$3,000
Base Value $2,500
Base x 1.28
$2,000
$1,500
$1,000
$500
$0
Progression of farmland tax value alarming Like clockwork, the base value of farmland used for property tax assessment has been increasing. This chart shows the progression of the base value since 2003 and the range of values that result from application of the soil productivity factors. The dollar amount and rate of increase are alarming at a time when the assessments of most other properties have deflated in the market value system used in Indiana since 2003. What farmers know is that the changes to the base value almost certainly result in a proportional increase in their tax bills. 2014 tax bills will be calculated on a base value of $1,760 which is derived using data from 2006 to 2011. This is an 8 percent increase over last year and hits farmers at a time when commodity prices and farm income are dramatically lower. The base value is averaged capitalized net income for the lowest five of six years. Because of delays in the data used in the formula, the four-year data lag creates the “perfect storm” where the base value is escalating and farm income is on the decline. The 2017 base value of $2,770 is derived using commodity prices and yields from 2008 to 2013. Accordingly, the lower prices experienced by farmers in 2014 won’t hit the formula until 2018. IFB will keep members posted on this issue, but it’s time to let legislators know that farmland taxes are out of control.
changing technology. Farmers need to be able to choose from all farming and husbandry practices to be successful in raising food, feed, fiber and fuel for this and future generations. Two bills addressing regulatory reform moved through the House of Representatives on unanimous votes. The first, HB 1217, authored by Rep. Steve Davisson from Salem and Rep. Don Lehe from Brookston, requires the Indiana Departments of Natural Resources and Environmental Management to develop and implement a process in which the agencies will jointly accept and process applications for activities that require permits from each agency. The bill lists considerations that must be made, such as how to change the application process and forms to improve efficiency in applying. A deadline of Jan. 1, 2015, was set for implementation. This issue has been regularly identified in the policy development process as an area of concern for Farm Bureau members. The second bill establishes an administrative process similar to that already used by agencies for DNR to seek reimbursement from responsible parties for loss of fish and wildlife. While claims made by DNR are rare, there have been several concerns raised over the past several years that individuals were unable to challenge DNR’s determination because the law required that the individual defend in a lawsuit filed by the Attorney General. The claims for damages are most often less than $3,000, which is significantly lower than the cost of a legal defense. Farm Bureau worked with DNR to suggest an administrative process that will replace the requirement for the Attorney General to bring suit. The changes are included in HB 1307, which was authored by Rep. Sean Eberhart of Shelbyville. Another bill which has moved without much fanfare but which is vitally important to agriculture is SB 271, authored by Sen. Ed Charbonneau. The bill authorizes a significant study related to water resource management. It includes provisions on studying the impact of water availability on economic development and rural areas and specifically notes the needs of agriculture. In addition, it states that the study committee should receive information on how state agencies and state and local government can better coordinate their activities related to oversight of water resources. The deliberate development of a comprehensive water plan that addresses the needs of agriculture is a priority for Farm Bureau.
February 18, 2014