Nebraska producers face rising property tax assessments
The difference of opinion regarding land valuation isn
Now, it looks like Dawes County landowners are headed down that road again. The average ag land property valuation increase statewide in Nebraska was 12 percent. Dawes County ag property taxes went up 25 percent, second only to Logan and Clay counties in central Nebraska which saw 31 and 34 percent increases respectively. Residential property taxes went up about 12 percent. The statewide residential average increase was 0.8 percent.
In Nebraska, property tax valuations are based on sales of similar property that occurred in three previous years. The 2010 tax year, payable in 2011, is actually based on sales that occurred in 2006, 2007 and 2008. Because of this, a recession and drop in property values takes a few years to show up on a property tax statement. This means that when landowners are tightening their belts financially, their property valuations may still be riding a wave of prosperity that ended two or three years previously.
Haynes and his neighbors aren
The next step is supposed to be to take their case to the state Tax Equalization Review Commission (TERC), but Haynes and other landowners hope to be able to skip that step and go directly to the State Supreme Court. They see a lot of parallels between their case this year and the case they presented in 1998 and expect TERC to have a similar negative ruling.
Haynes was among landowners in Dawes County who protested the valuation on 467 parcels for the 2010 tax year, said Lindy Coleman, Dawes County assessor. Neighboring county assessors reported 216 protests in Box Butte County, 40 protests in Sheridan County, and 18 protests in Sioux County. Michelle Zimmerman, assessor in Sioux County, which increased ag land values by 0.5 percent, said they saw a lot more protests last year, but not many people seemed upset this year, not even with a 23 percent increase in residential tax valuations. "We don
Haynes says Dawes County landowners are protesting their property valuations based on what they feel are inaccurate valuations. He says the root of the problem with the valuation is the sales that were considered representative of ag land sales in the county and used to set the valuation countywide.
"The state statutes provide latitude to the county assessor to utilize separate categories for properties purchased for recreation uses and for ag uses. If these separate categories aren
Bruce Johnson, a professor of agricultural economics at the University of Nebraska-Lincoln, agrees that the ag producers
According to a Center for Rural Affairs report, the lowest-income counties in the state, which are all predominantly agriculture economies, carry more than 200 percent more of the tax burden than the highest-income counties, which are mostly metropolitan. The report also points out that unlike sales tax and income tax, property tax does not decrease as income decreases.
Ron Pelton, who has spent most of his life farming and ranching in Dawes County, says between the taxes and the other expenses, he couldn
The taxes on that piece of property increased 225 percent between 1998 and 2009, from about $3,000 to $7,000. During the same period of time, the valuation increased 216 percent, from $208,000 to $450,000. The valuation is set at 75 percent of the estimated actual value of ag land, while residential, commercial, recreation and investment properties are taxed on the full 100 percent of the value.
The valuation on Pelton
The state of Nebraska, though, provides counties with a disincentive for reducing the tax levy. The state sets a minimum tax levy and if the counties don
Neighboring states use different methods of figuring property taxes. South Dakota, for instance, recently started basing ag property taxes on the productivity of the property instead of the sale value. Nebraska has neither the highest valuations nor the highest levies of all surrounding states, but when the two are added together, the formula shows that Nebraska has the highest property taxes, especially on ag land, figured both per producer and per acre. In most other states, high valuations are offset by low valuations and vice versa.’t just between the landowners and current assessor. In 1998—two assessors ago—Haynes’ property was valued at approximately twice what he figured it was actually worth as ag land. After a protest and successful appeal to the Nebraska Tax Equalization and Review Commission, his property tax valuation—and taxes—dropped by half. The same year, several other landowners won a case in the Nebraska State Supreme Court that changed the way their ag property valuations are figured and reduced their property taxes. ’t taking this lightly. They’ve started the protest process, which involved presenting evidence to the Board of Equalization that supported their claim of unfair valuations. In Dawes County, this board is made up of the three county commissioners. The Board of Equalization has the ability to adjust property values, but Haynes isn’t optimistic that this will happen. ’t typically have very many unless there’s something outrageous that happens," she said.’t used, as in Dawes County, it allows recreation, rural residential and 1031 sales [re-investment of funds from the sale of property] to influence the value of ag land. These sales don’t accurately reflect a fair production agriculture land value," Haynes said. "Several of these non-ag sales were used to establish this increased ag land valuation. At the same time, several sales that we felt were representative of ag land in both use and value were not used to figure valuation. That’s what we’re trying to have reviewed. We don’t mind paying our fair share, but we don’t feel this is fair."’ share in the Nebraska state tax burden isn’t fair. "The majority of education funding in Nebraska comes from property taxes, and the majority of property taxes are paid on ag land, so the ag producers’ tax burden for education funding is huge." In Dawes County, 68 percent of property taxes fund education.’t have made a living farming and ranching without a simultaneous career working on the railroad. "To give you an idea of the property valuations, I bought 2,200 acres for $500,000 in 2006. A few years later, I tried to sell it. I tried to sell it for a year and a half and finally ended up getting a buyer for it this spring at $425,000. That piece of property, which is rangeland that I figured could handle one animal unit for every 12 acres, has a tax valuation of nearly $600,000. I always figured the value of something was what someone is willing to pay for it. That doesn’t seem to be the case when it comes to valuing land for property taxes."’s property increased another 33 percent between 2009 and 2010, bringing the current valuation to nearly $600,000. The tax levy for 2010 has not been set yet, but Coleman says she hopes to see a significant decrease to offset the increase in valuations. The county commissioners set the tax levy in each county.’t meet that minimum amount of money per hundred dollars of valuation, the state reduces its contribution to the funding for schools. This leaves the counties to make up the difference by raising property taxes. — Maria Tussing, WLJ Correspondent