Officials in Leflore and other counties throughout Mississippi were scrambling Wednesday to urge their legislators to kill a bill engineered by a Delta-based group of farmers seeking relief from annual increases in farmland taxes.
House Bill 1456 was written by the Mississippi Property Tax Alliance (MPTA), a small but influential organization of farmers and agriculture land owners in Leflore, Sunflower and Holmes counties.
In the Greenwood area, the group includes Jim Tackett, owner of Heartland Catfish and a farmer; Bob Morgan, trust officer and farm manager with Regions Bank; and farmers and landowners John Bush, Clint Dunn, David Grossman and Harry O’Neal.
A version of the bill passed the House without opposition, and another version sailed through the Senate with only seven votes against it. The bill now sits in a conference committee of three senators and three representatives, who are charged with trying to work out the differences in the two versions.
Unlike other real estate, which is appraised according to the market value of the property, the value of farmland for tax purposes is determined by its “use value” through a complicated formula that takes into consideration soil classes and geographic region, recognizing that different farms with different soils in different parts of the state will produce crops of different quality and quantity. A three-year average of net income for each farm property is determined through average yields, average market prices and cost of production.
The MPTA complained that this complicated formula resulted until recently in increased value — and therefore increased taxes — of 10 percent compounded per year since at least 2009, and even longer in some areas.
According to an MPTA-released statement about the bill, “Some counties have taxes of $29 to $60 (per acre) on the better soils. This has become a burden to owner/operator farms and absentee landowners who are getting a lower return on their land. High taxes also affect market values and impact marketability of land in some areas when compared to lower farm tax states like Arkansas ($4 to $8 per acre), and Louisiana ($3 to $4 per acre).”
The bill proposes using a 10-year average of net income rather than the three-year average to stabilize use value and farmland taxes, while also applying a different capitalization formula.
“It’s just a way to find a way to slow down the increases in taxes,” Morgan said.
But Leflore County Tax Assessor Leroy Ware said estimates done by the Mississippi Department of Revenue on the impact of HB 1456 indicate it goes beyond stabilizing the situation and would instead result in a decrease in farmland taxes from between 16 percent and 20 percent. In Leflore County, he said, the decrease would be closer to 20 percent because of the percentage of agricultural land in the county.
And while that would be good news for farmers and investors who own agricultural land, it would shift the tax burden to non-agriculture property, such as homes and businesses, Ware said. Everyone else in the county would have to make up the difference, or county government would have to slash services and employees, he said.
Ware said farmland in Leflore County has an assessed value (derived from use value) of $48.6 million, but HB 1456 would reduce that amount by at least $7.8 million, based on state Department of Revenue estimates.
If that takes effect, Ware said, revenue for public schools would drop $300,467 per year, the county road and bridge fund would decline by $78,806 per year, and the county general fund, which pays for the operation of county offices and services, would lose $303,032.
To keep this from happening, Ware said, taxes would have to be raised on residental and commercial property as well as automobiles.
The MPTA argues that supervisors in each county have the power and responsibility to set their budgets according to the amount of revenue provided by reasonable valuations and stable tax rates, whether the revenue increases or decreases.
In a county that borrows to keep up with maintenance of rural roads and operates on a less-than-Cadillac budget, Ware said, the MPTA plan wouldn’t work.
“The concept that they’re going to cut all this money every year, it’s unrealistic,” he said. “I don’t think it will ever happen. You’re talking about them cutting services to the bone. That’s unimaginable how much they’d have to cut to get to this point.”
The MPTA has been able to convince previous sessions of the Legislature to change laws concerning farmland valuation.
Armed with horror stories of farmers receiving tax bills that were doubling and tripling every four to six years, the MPTA in 2016 was able to push through a cap on the increase or decrease in farmland values to 4 percent per year from the previous 10 percent. That law took effect in 2018.
The group was formed as a nonprofit 501(c)(6) corporation in 2016.
Ware said he understood farmers’ concerns about the annual increases they had suffered under the formula and had hoped the lower cap could play out over a few years to determine if it indeed made a difference for farmers.
HB 1456 goes beyond that law and “is not the best solution to the problem,” Ware said.
“It would have a devastating impact on this county and every county in the Delta,” Ware said. Legislators are being contacted by county officials to explain their problems with the bill in hopes of killing it for the session, he said.
The MPTA, for its part, said HB 1456 would be phased in over a number of years to allow for a gradual change in the valuation of farmland and give taxing bodies time to adjust to living with less.
•Contact Gavin Maliska at 581-7235 or email@example.com.