Mo. Senate rejects farm tax increases

Friday, March 2, 2012

JEFFERSON CITY, Mo. -- Missouri lawmakers rejected a plan Thursday that would have increased taxes on the state's best farmland, even as some senators said putting off the property tax increases would be unfair to the state's urban and suburban residents.

Property taxes for Missouri farms are based on the land's "productive value" rather than its market value. Missouri farms are grouped into eight categories based on land quality, with the best deemed Grade 1 and the worst Grade 8.

The State Tax Commission voted in December to increase the productive values of the four highest grades for the 2013 and 2014 tax years while leaving unchanged the tax rate on the remaining grades of land, which includes pastures, forests and less productive crop land.

The commission estimated that about 65 percent of the state's agricultural property would not be affected by the proposed tax hike, and that it would increase taxes on the most productive land by 29 cents per acre, or about 8 percent.

Lawmakers had until this coming Sunday to vote down the tax increase. Senators did so Thursday with a 19-8 vote. The House voted 117-39 last week to reject the tax hike.

Productive values have not increased since 1996, but Sen. Brian Munzlinger, R-Williamstown, said farmers can't afford more taxes because of flooding and other natural disasters that affected many rural parts of the state last year.

"It has been a long time and 8 percent truly isn't that much," he said. "But following 2011, I personally didn't think it was a good time to raise taxes on farmers."

Missouri's agricultural property taxes, which help fund the state's public schools, are calculated by taking the productive value, multiplying it by 12 percent and then multiplying that figure by the local tax rate.

Several senators said Thursday that the current system is unfair to taxpayers in their urban and suburban districts who have seen their property taxes fluctuate with the values of their homes over the past 16 years.

Sen. Jim Lembke, R-St. Louis County, said that people in his district have been hurt not by natural disasters, but by the larger economic downturn. But because St. Louis-area property taxes have increased during the past 16 years, he said residents of his district end up paying more for schools.

"Our property taxes are about where they should be," he said. "We're fighting to get more funding for K-12 education. That really benefits our districts a lot less than it benefits the rural districts."

Sen. Joseph Keaveny, D-St. Louis, said that having a commission set farmland tax rates allows farmers to give input about what has happened to their land and their industries every two years. He said it was unfair for the Legislature to continually reject the commission's recommendations in favor of no tax increase at all.

"We have a board that offers their recommendation over some discussion and then after all that process, we inject politics," he said. "I would hope that everyone would like to pay their fair share."

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