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States wrestle with property tax issues

Many Midwestern states are wrestling with how to reduce property taxes on agricultural land.

In Nebraska, Governor Pete Ricketts has proposed shifting from a market-based assessment to an income-based assessment for ag land. Ricketts says the change would drive out abnormal factors in assessing ag land for property tax purposes.

“One of the things that we have seen is that there are people buying ag land that are not for production purposes,” Ricketts says, “and that is driving up the price of that ag land beyond what that piece of ground can actually support in income.”

Ricketts says the method has been adopted by a number of states which rely on agriculture.

“Every state does it a little bit differently–for example, how many years that they use for an average yield—that can vary from state-to-state,” he says. “I believe South Dakota went to this methodology in 2008. So we did look at other states, but we came up with a system that is unique for Nebraska.”

However, Nebraska Farm Bureau says Ricketts proposal does not go far enough in addressing the ag land property tax problem in Nebraska. Farm Bureau has proposed expanding the state’s sales tax base and using that money for property tax reform.

Property taxes are also an issue in Iowa.

Iowa Farm Bureau is calling on the Iowa legislature to take steps to protect property taxpayers from further increases. Farm Bureau president Craig Hill says one example involves property tax contributions to Iowa’s mental health system.

“The mental health funding system in Iowa forces a cost to a rural resident of about 76 dollars a person, per capita—and the mental health funding for someone in an incorporated area might only be 32 dollars per year,” Hill says.

The legislature needs to address that disparity, Hill says.

“We’d like to see the state of Iowa take over more of that cost of mental health funding, rather than the county property taxpayers paying for it. We think that’s a more fair, equitable system.”

Hill says Iowans will pay more than five billion dollars in property taxes this year. That figure has nearly doubled since the year 2000.

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