The Indiana Department of Local Government Finance released the new base rate for farmland at the end of February. That rate will be $1,610 for taxes in 2019 – down from $1,850 this year.

Now that I’ve spoiled the punchline, let’s say what that means. Taxpayers pay their property tax bills based on the assessed value of their land, buildings and business equipment, times the tax rate charged by each local government. Assessed values are based on predicted selling prices for most properties.

Farmland assessments begin with the base rate, which DLGF calculates for a typical acre that grows corn or soybeans. The base rate is adjusted for soil productivity, so more productive land is valued higher, and for influence factors such as frequent flooding, which reduce value. The calculation uses data on corn and soybean prices, and those prices are down in recent years. So, the base rate of farmland fell from $1,960 per acre for taxes in 2017, to $1,850 for taxes this year, and $1,610 for next year.

The base rate will keep falling. We run projections for the farm economy through the base rate formula to anticipate where it’s headed. A year ago, I wrote that the base rate for taxes in 2019 would be “something like $1,600.” Thank you. Thank you very much.

It’s no magic trick. A year ago, it was clear that corn and soybean prices would not change much. The formula showed that the base rate had to drop to near $1,600. Looking ahead, it should drop again, to around $1,500 for taxes in 2020. During the 2020s it will stabilize at around $1,200. That’s down 35 percent from this year.

Farmland owners will pay less in property taxes. Almost everyone else will pay more. Property tax rates are recalculated each year by dividing the property tax levy by each local government’s taxable assessed value. The levy is the amount that local governments intend to collect in property taxes, based on what they need to deliver services. It’s limited by state maximum levy controls.

With the base rate falling, taxable assessed value will be lower, so tax rates will be higher. Farmland owners will pay less, because their assessments are down. Homeowners and business owners will pay more, since their assessments do not decline.

Except … some taxpayers are at their tax caps. The caps are constitutional limits on tax bills, equal to 1 percent of the value of homes, 2 percent of the value of other housing, and 3 percent of the value of business property. If tax rates rise, some taxpayers will hit their tax caps, and will not have to pay any more. That means local governments collect less property tax revenue.

We know the directions tax bills and revenues will change. But how much will they change? Let’s take a county with a lot of farmland and do some calculations. About a third of Carroll County’s net assessed value is farmland, so a 35 percent drop in farmland assessments will cut total assessed value by about 12 percent by the 2020s.

Tax rates would rise by between 10 and 20 cents per $100 assessed value. That would add 8 to 10 percent to the tax bills of nonfarm taxpayers. Taxes paid by farmers would drop about 16 percent. That’s less than the drop in the base rate, because tax rates are up, and farmers also own buildings and equipment.

Governments with higher tax rates would lose revenue. Governments overlapping cities and towns would lose the most. In Carroll County that includes the county government, Delphi City, and Delphi Schools. In total, revenues would be about $150,000 lower. That’s a 1 percent revenue loss, manageable for local government budgets.

Most Carroll County tax rates are low, so few taxpayers are at their tax caps. Revenue losses would be greater in rural counties where tax rates are higher. Effects in urban and suburban counties will be much smaller, because farmland is a much smaller share of assessed value.

So, here’s the outlook for rural property taxes: Look for a big drop in farmland assessments, a noticeable drop in farmland tax bills, an added increase in non-farm taxes, and a manageable loss in local revenues.

Larry DeBoer is professor of agricultural economics atPurdue University.

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