The taxable value of irrigated farmland will increase by as much as 286 percent in Elmore County and 226 percent in Bonneville County as the Idaho State Tax Commission moves to make them comparable with their neighbors.
Some other Idaho counties are seeing similarly high year-to-year increases. Still other counties’ irrigated-farmland values are rising more moderately, or even falling slightly, after the counties updated their valuations and methods earlier.
“We have been, as a Tax Commission, working with this the last couple of years to get counties, based on better data, to move their assessed values,” said Steve Fiscus, administrator of the commission’s Property Tax Division. USDA data and University of Idaho studies pointed to a need to update values.
The goal, aside from making sure irrigated farmland pays its fair share of the tax burden within a county, is to value it similarly among counties in an area, he said.
“For example, on the border between Twin Falls and Elmore counties, (agricultural) values should be comparable, for equity but also joint taxing districts,” Fiscus said.
Taxable values for irrigated farmland this year will increase by 22 to 216 percent in 12 areas of eastern Idaho’s Bonneville County. Elmore County, to the west, will see taxable-value changes for its irrigated farmland ranging from a 1 percent decrease to a 286 percent increase across 24 areas.
Before the adjustment, irrigated farmland in Bonneville County had an average value of $316 per acre, Fiscus said. In Butte County, which is not contiguous to Bonneville but is in the region and has similar agricultural ground, irrigated farmland is valued at an average of $795 per acre after a 33 percent increase this year. Bingham County, which borders Bonneville, is flat this year at $721, while a 1 percent increase put Jefferson at $642 after a big jump two years ago. Madison County’s average value of irrigated farmland per acre rose 13 percent to $764.
Other 2018 year-to-year percentage increases for irrigated farmland in Idaho counties include 199 percent in Boise County, 226 percent in Camas, 31 percent in Lincoln, 34 percent in Cassia and 33 percent in Butte, he said.
The changes will impact farmers’ bottom lines.
“I’m a pretty small farmer and I don’t own that much, so for us it’s not a lot of impact,” said Marc Thiel, who grows irrigated potatoes, wheat, barley and alfalfa on mostly leased ground west of Idaho Falls in Bonneville County. “But you get some of these larger guys who own several thousand acres, that is a significant expense. That is a big chunk of change.”
The timing of the valuation increase is difficult in light of currently low commodity prices, he said.
The state’s valuation method aims to determine net income to a farm landlord, Fiscus said.
Stephanie Mickelsen, who co-owns potato farms in several eastern Idaho counties, said the Tax Commission recently has had counties value farmland based on the cash-lease, rather than crop-share, method. She said this partly reflects increased purchases of farmland by investment companies that pay a premium and in turn lease to farmers, also at a premium.
“Because of that, it is skewing the market,” she said.
Mickelsen said her family’s irrigated farmland in Jefferson County about a year ago more than doubled in assessed value after that county switched to the cash-lease, or cash-rent, method. In contrast, Bonneville County — which had used a crop-share approach — met with a group of growers early each year to discuss various business factors to help determine valuations.
“The return on my ground has been down the past five to eight years,” she said. Sizable increases in irrigated farmland values thus amount to a shift of tax burden from one type of property to another, she said.
Aaron Hepworth, who farms just under 10,000 acres in south-central Idaho, said the cash-rent method is a challenging way to establish value. Variables include which irrigation district the farm is in; the type of water the farm has; and whether the farmer or landlord is responsible for watering, power, crop rotation restrictions and local water curtailments.
The Post Register of Idaho Falls on Aug. 22 reported the Bonneville County Commission took issue with the state Tax Commission’s plan to substantially raise assessed value of local irrigated farmland. The county has argued the Tax Commission staff’s determination was arbitrary, that the staff would not detail why such a large increase was needed and that the county uses a detailed method — taking into account various measures of farm profitability — to determine value.
The Tax Commission, acting as the state Board of Equalization appeals panel, on Aug. 27 voted to approve final notices and orders for Bonneville and Elmore counties, which stated their cases to the board Aug. 23 and 24, respectively.
“It was determined Bonneville needed to use the accepted five-year averages for crops grown, commodity prices and rotations,” he said. The county had used 10-year averages for some measures, he said.
Elmore County next year planned to re-evaluate irrigated-farmland values and possibly phase in the new values, but the phase-in wasn’t workable statutorily, Fiscus said.
For Bonneville and Elmore counties, the only appeal opportunity is to the Idaho Supreme Court, he said.
The counties will update assessed values for individual properties. Farmers won’t be able to challenge them by the time taxes are due in December, but they can challenge them at the county level when assessment notices with current values are sent by next June.
Fiscus said the other counties that this year worked with Commission staff to raise irrigated-farmland values used local processes — sending out updated notices, setting 10-day appeal periods and reconvening county equalization boards.
The number of counties that changed their irrigated-agriculture valuations from last year was not available immediately, Fiscus said. “But it was more counties, and a more significant change,” he said.
All Idaho counties each year report their valuations, and the progress of their reappraisal programs, to the Tax Commission. The commission’s staff may intervene if something does not appear to be correct from one year to the next, if certain values seem oddly high or low, or if property types aren’t sharing in the tax burden equitably. A state law gives production-agriculture ground a property tax break.