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County assessor explains the intricacies of taxing farmland

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[April 03, 2012]  Rosanne Brosamer has been serving as Logan County's tax assessor since 1994, but she actually began working in that office in 1979.

Over the years, she's seen a great deal happen in the development of a tax program for agricultural properties. That makes Brosamer the go-to person when farmers need to know how much tax debt they are going to have in the coming years.

What might surprise many non-farm readers is that taxes on agricultural lands are not based on the market value of an acre. Therefore, even though overall property prices are currently very high, the tax base on farmland is not affected.

When looking at taxes on farm ground, Brosamer said several factors are taken into consideration: the various soil types in a plot of land, what the land is being used for and annual crop yields.

Brosamer said that in years past, when looking at the various soil types in a plot, a weighted rate was applied, based on the combined average of all soil types. However, over the years that has changed.

Today there is an assessment factor for each individual soil type in a field. There may be a half-dozen or more soil types in a large field, and each one of them will have an assessment factor on the tax bill.

The soil types in Logan County vary widely, from poorly drained, flood-prone acreage to flat, rich black soils that are highly productive.

Brosamer gave an example of what can show up on the bill. One field she talked about has a large amount of soil type 43A1. Brosamer said the soil has a specific name, but she uses the coded information. A 43A1 soil type, she said, is subject to flooding. Because of that, it gets a 20 percent discount over a more perfect soil type where drainage is good.

Brosamer also noted there are factors based on the use of land. All of it being labeled as agricultural, there are still variances according to if the land raises grain crops, is permanent pasture, has been enrolled in the Conservation Reserve Program, is woodland, or has ditches, ponds or waterways on it.

The rates that are applied to farms for varying conditions are established using certified rates from the state. Advisers from the Illinois Department of Revenue have input as well as experts from the Illinois Farmland Assessment Technical Advisory Board.

In addition to the ratings for soil type and land use, a productivity rating is also involved in the tax assessment.

Brosamer said the rating is scored between 60 and 130 and reflects the annual crop yields of the land being taxed, the current crop price, commodity pricing, current land bank interest rates and more.

 This rating factor also involves a five-year average of yields. The 2011 tax assessments are based on the average yields between 2006 and 2011. The importance of the five-year span is important as seen by yields that have been up and down the last few years.

In Logan County, 2007 was a record-breaking yield year, and that is having a big effect on the five-year average, according to Brosamer. By 2013, that 2007 yield will fall out of the equation, but according to the recently released crop report for 2011, yields were much higher than the state average. Therefore, the five-year average is going to remain high in most cases until at least the year 2016.

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On the better side of things, there is a limit as to how much taxes can increase in a year.

According to Brosamer, the increase in taxes cannot exceed 10 percent per year. But, at the same time, she said the full 10 percent has been applied consistently for at least the last four years. She also knows it will continue through at least the 2012 tax assessment, and more than likely, the 2013 as well.

The only thing that would cause the increase to fall would be if in the coming years, Logan County would experience large reductions in yield, and even then Brosamer said it would have to be near-catastrophic losses in order to lower the average significantly.

In addition, what is good news for taxes going up is also bad news for taxes going down. The 10 percent ceiling also has a 10 percent floor, which means no matter how bad things could be, the most taxes would be reduced would be 10 percent.

Brosamer said the tax figures she produces each year are a valuable tool to farmers who are looking at what their expenses are going to be for the coming year. Taxes are one of those invisible costs that the non-farmer doesn't stop to think about, but for grain producers, it's something that is on their mind all the time.

Brosamer concluded by saying another thing she always notes. When farmers come into her office to look at their taxes, they don't seem to be interested in how much of that bill is for their home.

What this implies, Brosamer didn't say.

Perhaps it demonstrates the business attitude of the American farmer: The farm has to support itself, and the home that may sit on it is just an extra perk.

[Nila Smith]

This is one of the articles you will find in our special Spring 2012 Farm Outlook Magazine.

The magazine is online now. Click here to view all the articles, which include:

Introduction by John Fulton
Weather: The biggest variable
2011 crop yields
Productivity: Corn-on-corn
Alternative income
Protecting your income with insurance
The value of land conservation
Property taxes on farmland
Land value in Logan County
Increasing yield with aerial application
The importance of Ag Scholarships

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