By Tim Cox
Farmland market prices are skyrocketing while the taxable value of agricultural ground is at an all-time low.
Market prices for farmland are up 18.5 percent in Mercer County while the state-regulated Current Agricultural Use Value (CAUV) is near rock bottom. Farmers pay property taxes based on the CAUV rate and only would pay taxes on the market rate if they take their land out of agricultural use.
The trend is good news for farmers but could mean higher taxes for business and residential properties in heavily agricultural areas.
This is especially true for Parkway Local Schools district, Mercer County Auditor Mark Giesige said. Because schools are guaranteed a certain amount of money from the tax levies they collect on, when farmland tax rates go down, others end up paying more.
"I am not anti-CAUV, but this does have an effect on the shifting of the tax burden," Giesige said. That means Parkway residents could end up paying higher millage rates than they approved at the polls.
The CAUV rate dates to 1975 when it was created by the state Legislature. The rate is based on soil type, crop yields, production costs and other factors. The CAUV rate varies based on soil type but is as low as $200 per acre today. That is far less -- without even adjusting for inflation -- than the rate was in 1975. The 1975 rate was about $550.
"When the CAUV goes down that much, it can be problematic because it shifts the burden to residential," Giesige said.