Property equalization process antiquated?
The Iowa Department of Revenue notified Iowa’s county auditors on Aug. 14 of the assessment adjustments on agricultural, commercial and residential values. John Deegan, our Jasper County Assessor attempted to appeal the issue to the state, but was denied any action, and advised that home, commercial and ag landowners would have to make their appeal to their respective county assessor.
As most are well aware, every two years the Department of Revenue is required to equalize property tax assessments in all assessing jurisdictions. Equalization is accomplished by increasing or decreasing, when necessary, the aggregate valuations of certain classes of property within each assessing jurisdiction. This is to ensure that all classes of property have been assessed at the value defined by state law and that taxation statewide is applied equitably. An equitable assessment level among counties is also necessary for a fair distribution of school aid and other state services.
All 99 Iowa counties have assessors, as do eight cities. Thus, there are 107 assessing jurisdictions. The Department of Revenue equalizes agricultural, residential and commercial properties.
Residential and commercial assessments are based upon sales of properties within the jurisdiction. Agricultural assessments are more complicated. Agricultural real property is based on productivity and not market value. The department utilizes a formula to calculate the productivity value.
Assessments for agricultural property across the state are increasing 48 percent in 2009. However, the statewide “rollback” factor that is applied uniformly to all properties within this class will limit taxable value growth to 4 percent for agricultural property.
The Department of Revenue has provided information in advance to the assessors on the increase in productivity. A majority of the assessors made the assessment changes last spring and are not receiving equalization orders.
Residential owners in Jasper County will see a 6 percent increase in their valuation. In other words, if your house is now valued for tax purposes at $100,000, the new value will stand at $106,000. Commercial property will see a 5 percent increase, and again, agricultural property will see, after the “rollback,” a 4 percent increase.
The kindest thing I can say about this is “it’s asinine” for the Department of Revenue to even assume that Jasper and many other counties in Iowa should receive an order to increase valuations. My observation is that only recently Jasper had one of the highest unemployment rates in the state! I have not observed real estate sales that would place us in a category of those counties to deserve the increase, nor have I observed the comeback of economic activity in the commercial arena to merit a 5 percent valuation increase. Then comes the agricultural sector. Yes, we have had bumper crops the past two years, and likewise this year. However, the costs of inputs, and the low price of agricultural commodities is such that we’re observing financial trouble on the farm.
It appears the Department has failed to recognize that, at best, we are only starting to gain ground from a global recession. Yet, agricultural states will lag in their economic revitalization, and such is the case for Iowa.
I am absolutely dumbfounded by these actions, and have submitted a letter to the Department of Revenue requesting their rationale for Jasper’s inclusion in the equalization orders. I can guarantee you their response will be comprised of “figures” documenting their action with residential sales, commercial sales and “productivity.” It doesn’t take a rocket scientist to understand that one can have the most productive land in the world, which some of Iowa has. But, if the crops derived from that land require tremendous amounts of investment for fertilizer, herbicides, insecticides, and then the sales prices of the commodities (meat or grain) are low, the money is just not there to meet the request for payment of property taxes on the original value, let alone the newly assessed value.
This is an issue where I have already advised the Legislative Service Agency that I am requesting a “study bill” draft to evaluate the process of equalization. The law has been in the code for a long time, but that doesn’t make it right. Frankly, it’s well past time to seek answers on the process, and make changes as needed. I can’t imagine anyone would hesitate to do so.
Questions of comments? dblack@black4senate.com or call me at 515-975-8608.
