Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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CONTENTS: |
Authorizes partial exemption from real property taxation of
land in a conservation easement or agricultural easement |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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General Revenue Fund |
||||
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Revenues |
- 0 - |
- 0 - |
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Expenditures |
- 0 - |
- 0 - |
Possible small increase |
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Note: The state
fiscal year is July 1 through June 30.
For example, FY 2008 is July 1, 2007 – June 30, 2008.
·
Any
loss of property tax revenues as a result of the partial tax exemption under
the bill appears likely to be quite limited.
·
State
base cost funding to school districts generally would rise, if property tax
revenues were lost as a result of the bill, by more than the reduction in
reimbursements to school districts and other local governments for the 10%
rollback, resulting in a possible small net increase in state outlays.
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LOCAL
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
|
|
School Districts |
||||
|
Revenues |
- 0 - |
- 0 - |
Possible small loss |
|
|
Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Other Local Governments |
||||
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Revenues |
- 0 - |
- 0 - |
Possible small loss |
|
|
Expenditures |
- 0 - |
- 0 - |
- 0 - |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
Exemption
of half the value of land in a conservation easement or agricultural easement,
and meeting other conditions, might result in loss of real property tax
revenues to local governments. Any such
loss appears likely to be quite limited in amount.
·
Increased
state base cost funding to school districts would offset part of any such loss
of tax revenue.
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The bill would exempt from
real property taxation half of the value of land in a conservation or
agricultural easement that meets certain other conditions. Eligibility for the partial tax exemption
would require that the landowner's property not be valued at its current
agricultural use value (CAUV), and that the easement be perpetual in duration,
with an instrument executed and recorded.
Eligibility would also require compliance with all terms of the
easement. Any easement property on
which a homestead is located would not be eligible for the partial tax
exemption. Land partially exempted from
taxation could not also have its taxable value diminished to account for the
existence of a conservation easement, as specified in R.C. 5713.04
(unchanged by the bill).
The bill provides no
offsetting revenue to local governments from the state, so would potentially
reduce local government net revenues.
However, statewide CAUV-method values for land averaged only 14% of
taxable values for those same properties in their "highest and best"
uses in 2006. This percentage varied
from county to county, ranging from 6% (Warren County) to 30% (Gallia
County). Among land owners who are
eligible to value their real property using the CAUV method and who elect to do
so, only those for whom CAUV on a parcel exceeds 50% of highest and best
valuation would appear to gain from having their property valued under the
provisions of the bill. In view of the
statewide and countywide average ratios, plausibly few and perhaps no parcels
would exceed this threshold. In
addition, only property owners with conservation easements for whom the
accounting for the diminution in value resulting from the conservation
easement, under R.C. 5713.04, was less than half of the highest and best use
valuation would gain from the bill. If
availability of the partial tax exemption provided under the bill induced some
property owners to establish an easement who would otherwise not do so, and if
those property owners consequently ceased to be eligible for CAUV tax
treatment, real property taxable values and tax revenues from these property
owners could rise.
LSC does not have an
estimate of the dollar amount of property tax revenues that would be lost, if
any, as a result of the bill. However,
the amount of any reduction in tax revenue appears likely to be quite limited
because of the factors cited above.
To the extent that the bill
does result in a loss of tax revenue to school districts and other local
governments, the cost to the state of reimbursing local governments for the 10%
rollback of residential and agricultural real property taxes also would
decline. State base cost funding to
schools would rise except in districts receiving guarantee funding from the
state (about half of districts) or in districts with high per pupil property
values (about 4% of districts). If
state base cost funding increases, the rise generally would be larger than the
reduction in state reimbursement for the 10% rollback, resulting in a net loss
to the state. Since any loss of tax
revenues as a result of the bill appears likely to be quite limited, any impact
on state expenditures would be modest.
The bill provides for
applications for the partial exemption between January and March, and would
apply to the tax year in which the partial exemption is approved and all
subsequent tax years. The bill does not
declare an emergency, so the earliest tax year for which it could affect tax
receipts is 2009, payable in 2010 since Ohio real property taxes are paid one
year in arrears.
LSC fiscal staff: Phil Cummins, Economist