Local lawmakers give Ohio tax commissioner ultimatum over property value hikes

Agricultural land values could go up as much as 110%

As state lawmakers are making moves to mitigate an expected 42% value hike for residential properties, Butler County Auditor Nancy Nix is warning agricultural land values are expected to jump 110%.

Nix sent out a letter Thursday evening to county and state officials warning the state is planning to increase agricultural properties around 110%.

She said she has received information from the Ohio Department of Tax Equalization (DTE) about the farmland increase. Unlike residential properties, which are based on fair market value, the Current Agricultural Use Value (CAVU) values are based “on a study of seven years of crop income and expense data with the highest year and lowest year being dropped from the analysis.”

“As you know, the DTE has recommended a countywide increase to residential values of 42%. From what the DTE has recently communicated to our office, the average CAUV soil value is set to increase from $668/acre to $1,403/acre, or +110%. This increase is preliminary with final values released next month,” Nix wrote. “We have reached out to the DTE and the Ohio and County Farm Bureau to express our concerns. To our knowledge, farmers are not yet aware of the looming increase on their CAUV values and, ultimately, their tax liability.”

There are about 135,000 residential and around 4,000 farm parcels in the county and Nix said the tax impact on farmers — because of this expected 110% hike — won’t be as severe as the 42% hike on residential taxpayers.

“Just because their land is so heavily discounted the dollar impact wouldn’t be as treacherous,” Nix said. “But it would still be very significant.”

Nix’s CAVU Administrator Berkley Rose said the giant increase is due to an erroneous supposition that farmers’ costs haven’t increased.

“They’re saying the price of commodity crops has increased significantly, in other words, the income stream to the farmers has increased that significantly,” Rose said. “But what we’re struggling with is that in that same formula the cost associated with those crops has remained relatively stable to flat. Any lay person not familiar with farming would have to say how is that possible.”

What can be done?

The county commissioners convened a summit of local lawmakers and county officials two weeks ago to discuss solutions to the 42% average value increase. Since then the state legislators have been working feverishly — they say a fix needs to be incorporated into the budget bill that must be passed by June 30 — to mitigate the value hike.

Rose said it is unlikely the legislators can do anything with the hike on farmland, at least not quickly. Rep. Rodney Creech, who is a farmer, agreed.

“ We’ve got to be very careful, when you make a change, for every action there’s a reaction,” Creech said. “But if we can get the property value increases under control on the front end, I think it’s going to help CAUV and everybody. There’s pieces that go into that like land value and crop prices, there’s a lot of things that go into the CAUV, it’s a whole different animal.”

On the residential hike front, Creech, Rep. Thomas Hall and state senators George Lang and Terry Johnson (Clermont Co.) had a “very tense” meeting with state Tax Commissioner Patricia Harris on Tuesday, and basically gave her an ultimatum.

“We made it very, very, very clear that if the tax department does not work with us or does not do some of the changes that we are requesting, that they can do on their own and not by a legislative fix, that we will pursue legislative action,” Hall told the Journal-News adding they gave her a Monday deadline to act.

Lang said if Harris doesn’t agree to a solution they are going to “pick what we think is going to be the best option for our rate payers by Monday” and there will be a standalone bill ready for debate in the House and “I’m going to try and amend it into the omnibus bill for the budget.”

Lang also said the Harris meeting was “tense” and all four of the legislators were pretty angry when they learned “they chose to use the one-year average when they could have just as easily used the three-year average.” Nix has said if the three-year average were used the increase would be around 24%.

“We want that three-year average, I will not settle for anything less than that,” Hall said.

The legislative solutions include adopting Prosecutor Mike Gmoser’s idea to change the statutory language from may to shall — which takes away Harris’ discretion — and weighting all three years equally. Another amendment that is still being written would effectively freeze the property values at the 2020 level via a tax credit for this year.

During the summit Gmoser said there are parts of the law that say the tax commissioner “shall” do certain things regarding data collection — which removes any discretion — and other parts say the commissioner “may” do certain things, like decide how to apply the data, “the Ten Commandments doesn’t say thou may not kill, thou shall not kill.”

“My suggestion is to our representatives and our senators that you take that word may and change it to shall,” Gmoser said.

Gary Gudmundson, communications director for the Ohio Department of Taxation, responded to the Journal-News like this when asked about the meeting.

“Commissioner Harris and her team scheduled and attended a productive meeting with several members of the legislature to explain the property tax valuation process and to listen to concerns,” Gudmundson said. “She agreed to review and provide feedback on any legislative idea the General Assembly would like to explore to change the process the State follows to assign value according to the Constitution.”

Representatives Sara Carruthers and Jennifer Gross couldn’t be at the meeting with Harris but both said they support fixing the problem legislatively. Carruthers met with Harris on her own before the summit and found her to be unresponsive to the needs of “Joe blow public.” She said they’ll put the fix in the budget bill and she believes it’ll pass.

“There are enough people in the legislature that are stubborn, and I’m one of them,” she said. “She is definitely barking up the wrong tree if she thinks she can fight us. We’re going to get it in there and we’re also going to change the language. This is bulls--t.”

Gross said she is 100% behind mandating the three-year equally weighted average amendment, but she needs more information about the value freeze idea.

“As a low tax gal of course I’d like that, but is it reasonable, is it rational and is it feasible,” she said. “What does that do to all the people who benefit from a valuation increase like the schools, the townships, the cities, the MetroParks, the Butler Techs of the world. What happens then, do we know yet, how would it affect the end benefactors.”

Creech and Hall said they have also been communicating with Gov. Mike DeWine’s staff about this issue and are trying to get a meeting with him.

“We have not seen a legislative proposal, and we would certainly need to review the legislation regarding long term effects and unintended consequences for other counties in Ohio,” Press Secretary Dan Tierney told the Journal-News.

“The primary driver of this issue has been the great economic development success in Butler County and Southwest Ohio in general, which has led to a red-hot housing market in Butler County.

“While changing the weighted average might help taxpayers in red hot counties like Butler County, we need to look at if it would raise taxes on other Ohioans in other counties in different situations, and if it would harm taxpayers during a different market, such as an economic downturn,” Tierney said.

The Butler County Township Association also unanimously passed a resolution Thursday to send a letter to Harris supporting the commissioners’ protest of the 42% value increase, saying in part it “is untenable and unaffordable for the residents and families in our communities.”

Commissioner Don Dixon spearheaded the protest and told the Journal-News the legislators have responded with “record speed” on this issue. He said he has had many conversations, not only with people who represent the county but elsewhere and “I think there’s a 99.99% possibility we’re going to get something done with this.”

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