Last year the state Legislature directed county equalization directors to make larger adjustments in farmland values and this year producers will really feel the pinch.
HB1003 was aimed at helping counties bring cropland and pastureland into line faster under the state’s new production-based system for setting tax values. The initial maximum increase or decrease in value was capped at 10 percent annually, but went to a maximum of 25 percent a year, depending how far a county is behind/ahead.
Day County director of equalization Dari Schlotte says cropland assessments here will go up the full 25 percent while pastureland will jump by about 15 percent.
“We are basically moving from partial productivity to full productivity,” he explained, “and that’s kind of a moving target because productivity prices and yields keep going up.”
Both cropland and hayland productivity are calculated on an eight-year rolling average formulated by SDSU and NASS. The formula tosses out high and low value years and the remaining six are averaged into a weighted rating on both crop and non-crop soils.
As an example in 2012, the average value of all Day County farmland (crop and non-crop) was $727.06 and that value will go up to $898.37 in 2013.
Schlotte warns that while the latest hike will go a ways in catching the county up, producers are likely to see higher assessments in the future. Strong crop prices and/or higher yields escalate productivity values faster than the averaged assessments and thus put counties further behind the state standards.
“Productivity valuation will continue to climb until we catch up,” Schlotte warned. “The only other choice is to go to full market value and no one wants to be there.”
The director of equalization says residential and commercial property valuations will also rise this year, although not as much as ag land.
“I’m not sure exactly how much it will go up right now, but I expect it to be a minimum of five percent,” he concluded. “We should know more about that in March.”
Schlotte says the last countywide residential and commercial appraisals were done in 2002, so it’s likely they will be recalculated before too long.