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Municipalities to garner less property taxes from farmers in 2014


Municipalities with swaths of farmland have grown used to raking in more property taxes from farmers each year, but they won’t benefit as much starting in 2014.

A new state law signed by the governor this week limits annual increases in the state’s agricultural land assessments to 2 percent, down from a maximum of 10 percent. The change has been lauded by farmers, who have been hit with property tax increases year after year because of rising values under the state’s per-acre formula. While the farmers stand to benefit greatly, the impact on town budgets won’t be severe, local assessors say.

State assessments determine if farms are eligible for a partial tax exemption. When values rise under the state’s per-acre formula to the point where they approach the local assessment, a farmer’s exemption shrinks and he pays more property taxes. Farmland values determined by the state have increased over the past five years. In 2008, farmland with the highest quality of soil was valued at $620 per acre. This year, it’s valued at $999 per acre. The new 2 percent assessment cap will slow that trend.

“Farmers won’t see their tax exemptions erode as fast as they have been,” said town of Adams Assessor Roger E. Tibbets.

For example, the taxable value of a 240-acre farm in Adams in 2012 was $294,078 in 2012 after it received an exemption of $127,422. This year, the farm’s taxable value was $308,094 after receiving an exemption of $113,406.

The result of the 2 percent cap in the state formula is that municipalities won’t collect as much in additional property taxes year over year. In Adams, for example, the total value of agricultural tax exemptions in 2013 is $1,501,233. Hypothetically, if state agricultural land values climbed in 2014 by 10 percent — as they have in the past — an additional $2,612 in property taxes would be collected by the town and $9,656 by the county. The combined increase for school districts in South Jefferson, Belleville Henderson and Sackets Harbor would be $46,134.

But because values will be capped at 2 percent, the town would be able to collect up to an additional $2,405, the county $8,884, and the three school districts a combined $42,443. Those figures were calculated according to 2013 tax rates.

With 87 farms on its tax roll, Adams has the second largest amount of agricultural land in the county behind the town of Ellisburg, Mr. Tibbets said. He conducts agriculture assessments on those farms each year according to a formula set by the state Department of Taxation and Finance. That formula calculates the price per acre of land on each farm based on the soil quality, which is ranked according to mineral group.

Land is first evaluated by the Jefferson County Soil and Water Conservation District, which provides assessors with a report that breaks down soil types. Exemptions are then calculated by determining the difference between a farm’s agriculture assessment — which is determined by the state — and its full assessed market value, which is determined by municipalities. As the state valuations increase, they decrease the exemption farmers are eligible to receive.

Assessments of farms are conducted periodically by municipalities when they do revaluations to determine the full market value of property. But municipalities will often wait years before conducting revaluations, Mr. Tibbets said, which keeps assessment values artificially low. When assessments are artificially low, it decreases the exemption in property taxes that farmers are eligible to receive according to the state’s formula.

Adams completed a revaluation in 2011, for example, and will likely finish another in 2015. The town of Watertown conducted its last revaluation in 1990.

In Adams, for example, market prices for farmland have jumped significantly since 2011. In 2011 farmers sold land for an average of about $1,500 an acre, but recent sales have ranged from $2,400 to $2,800.

“If the assessment goes up according to the market, you’re going to get an increased exemption because they don’t go up based on land values but on the commodity market for crops,” said Mr. Tibbets, who is also the assessor for the towns of Watertown, Brownville and Harrisburg. “Most of us aren’t doing annual reassessment but cyclical, which could be anywhere from three to six years.”

Rodman and Lorraine assessor Peter J. Rogers said farmland has not been worth enough in the two towns to become eligible for tax exemptions granted by the state assessment formula. But the 2 percent cap legislation could benefit farmers if market values continue to rise, he said, because they’d be eligible for exemptions.

“Land values have always been less than the ceiling” amount needed for state assessments, Mr. Rogers said. “But there have been higher land sales in the past two years.”

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