The Pence administration enacted its first law Feb. 27 when Gov. Mike Pence signed Senate Enrolled Act 319.
The law, proposed by state Sen. Jean Leising, of Oldenburg, will prevent scheduled changes in a tax on agricultural land value from occurring by maintaining the 2011 level for soil productivity.
“I’m very pleased to have the governor’s support of this bill,” Leising said in a press statement. “That says a lot about the importance of farmers and agriculture to Indiana’s economy.”
Had the state used 2012 figures for soil productivity, farm owners were projected to pay as much as 25% more in taxes this year. The state would have raised $57 million more in revenue.
Larry DeBoer, a professor of agricultural economics at Purdue University, said that would be wrong because the 2012 figures were erroneous.
“The formula starts with what’s called a base rate, which is a single dollar amount per acre, which is the same for the whole state,” DeBoer explained. “Then, they multiply that base rate because not all farmland is valued the same throughout the state.”
Because the soil productivity index is a multiplier, its range should average out to one. The 2012 figures had a 1.2 average.
DeBoer said that was like taxing farmers for increased yields twice because higher base rates per acre already reflect that farmers are able to produce higher yields than they were in 1980, when the soil productivity index figures were devised.
“Farmers are paying a lot more in property taxes now than they were five to 10 years ago,” the professor said. He added that next year, it is likely farmers will be paying double what they were seven years ago.
The law will also require the Department of Local Government Finance and agriculture researchers at Purdue University to recalculate the soil productivity index so it can be reviewed at a later legislative session.
“In regard to partnering with Purdue, we cannot speculate on what may or may not happen with the factors next year, and whether they will be accepted. Additionally, it is difficult to speculate if they will be higher or lower,” said DLGF spokeswoman Jenny Banks.
Whatever happens next year, DeBoer said, adjustments to soil values are likely to be small.
Originally published in Ellettsville Journal, 2013. Republished here for archival and portfolio purposes.