LINCOLN — A Lincoln think tank says that lowering the valuation of agricultural land for tax purposes — which is backed by Gov. Dave Heineman and farm groups — would benefit only a few farmers and ranchers who live near urban areas.
The OpenSky Policy Institute, which analyzes state tax and spending policies, said reducing the valuation of farm and ranch land from 75 percent of market value to 65 percent would result in the loss of about $102 million in local property taxes.
That, the institute said, would require school districts, counties and other taxing entities to either cut services by that amount or increase property tax levies to make up the difference.
Renee Fry, OpenSky's executive director, said that in urban counties, farmers and ranchers would see tax decreases because the tax load could be shifted onto homeowners and commercial properties. But in rural counties, she said such a tax shift could not occur because there is little residential or commercial property and lots of farmland.
“These communities must make up the lost revenue either by levy increases — which would wipe out much of the tax cut from lowering valuation — or by cuts to education, roads and other local services,” Fry said in a press release.
The analysis comes as a state legislative committee prepares to take public testimony on the idea on Friday.
The Nebraska Farm Bureau, the state's largest farm group, and Heineman have backed the valuation reduction, calling it an issue of fairness. Prices for ag land have skyrocketed in recent years, thus raising valuations and tax bills.
The average inflation-adjusted value of an acre of farmland more than doubled from 2007 to 2012, reaching an all-time high, according to OpenSky. Because of that, ag land now provides 29 percent of all property tax revenue, up from 24 percent in 2002.
The think tank has advocated other means to help farmers and ranchers, including increasing state aid to schools and local governments and a state takeover of some local services.
Steve Nelson, the president of the Farm Bureau, said he had not read the organization’s analysis but said cutting the valuation of farmland was just one portion of the Farm Bureau’s plan.
The farm group has also called for reducing government spending, increasing funds returned to taxpayers through an existing state property tax credit and shifting the funding of community colleges from local property taxes to state taxes.