Income-based farmland valuation method proposed in the Nebraska Legislature
NORTH PATTE, Neb. (Nebraska) — The appraised value of Nebraska’s agricultural and horticultural land would be based on its income potential rather than its market value under a bill hearing this week in the Nebraska Legislature’s Revenue Committee.
LB820 was introduced by Thurston Senator Joni Albrecht on behalf of Governor Jim Pillen. If approved, the measure would require county evaluators to use an income-based calculation to determine the agricultural use value of a parcel each year beginning in 2024.
In determining that value, appraisers would use estimates of income and expenses for each class of agricultural and horticultural land and capitalization rates set by a new five-member Agricultural Land Valuation Committee. The bill would cap annual increases in statewide assessed total value for agricultural and horticultural lands to 3.5 percent, according to the Nebraska Legislature Online Update.
Albrecht said that an income-based valuation method, used in neighboring Kansas, Iowa and South Dakota, is a “fairer and more equitable” valuation method than a market-based approach.
Pillen testified in support of the proposal, saying that Nebraska’s current method results in farmland and ranch land values that are based on the selling price of a nearby property, not a lot’s ability to produce income. He said this has led to “extraordinary” increases in agricultural and horticultural land valuations across the state, in some cases driving farmers and ranchers out of business.
LB820 has been approved by the Nebraska Cattlemen and the Nebraska Farm Bureau.
Testifying in opposition was Jon Cannon of the Nebraska Association of County Officials. Depending on the types of properties in a county, he said, a county council might not be able to raise the levy enough to make up for lost revenue due to valuation changes caused by the new method.
Also in opposition was Rebecca Firestone of the OpenSky Policy Institute. She said the change could shift more of the responsibility for paying public schools and local government onto residential and commercial property owners in areas with a mix of property types.
Shane Rhian testified opposing LB820 on behalf of Omaha Public Schools, saying it could increase the number of school districts receiving state equalization aid. He said lawmakers are also considering proposals this year to provide foundation aid to each district and reimburse districts for a greater percentage of their special education expenses.
No immediate action has been taken on the measure and the 108th Nebraska legislative session continues on Tuesday.
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