By Rep. Paul Anderson
Avian Influenza was back in the news last week with the announcement of up to 10 Indiana turkey flocks testing positive for the deadly disease. This appears to be a different strain from the one that caused the deaths of millions of birds in our state last spring, but the result is the same. Sixty thousand birds on the first farm have already been euthanized, and the other nine flocks are all located in the control zone set up around the first flock. The location of this new outbreak is in a county some 70 miles west of Louisville, Kentucky. The county, Dubois, is the leading turkey producing county in the state.
According to officials there, it’s not clear whether this year’s mild winter had anything to do with the outbreak. In addition, this particular strain, known as H7N8, has not been found so far in any wild birds.
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Passing a tax overhaul bill last year was not accomplished when negotiations concerning a gas tax increase stalled. This time around, chances to pass such a bill have improved greatly because Gov. Dayton has said the gas tax issue is off the table. That announcement came after the state’s $1.8 billion surplus became known last November. Several provisions of that bill, currently sitting where it was left last year (in a conference committee) need to get passed this time around. A state credit on ag land assessed for school capital referendums is at the top of the list, along with a repeal of the state income tax on Social Security proceeds. Another key feature of the House-passed tax bill last year is an exemption on part of the value on commercial property when assessed for the statewide business tax.
I recently attended an agricultural conference where many states and several Canadian provinces were represented. One of the most-discussed topics was the situation we face today as it relates to reduced farm income and still-rising property taxes. Most states use some kind of soil production or income-based method to determine the value of farm land, while Minnesota is one of only a few states that relies on a market-based approach when setting values. However it’s done, we all have a problem as it relates to the lag between when land is assessed and when the property tax is finally collected. In our state, land sales from up to two years ago are the basis for the property taxes we will be paying this year. And in many counties, land prices were still on the rise then, which means the tax on that land is still going up. What makes this situation frustrating for ag land owners is the state of the current economy with farm income dropping dramatically for nearly all products.
To illustrate the problem with our market-based assessment method, many land sales go for a higher amount than the land can actually cash-flow. A story this past fall concerning the sale of an 80-acre piece of land in southwest Minnesota illustrates what can happen when two parties are serious about purchasing the same piece of land. The bidding kept going up, and when it finally stopped, the price tag for this parcel was an unbelievable $19,000 per acre! There is no way that ground can produce enough income to justify that price, however that sale will be used to establish the going price of farm land in Rock County, Minnesota. It shows there are other forces in play that help to establish the value of farmland, and many of those factors have nothing to do with the land’s actual productive capability.