JEFFERSON CITY - An agricultural property tax hike proposed by the Missouri State Tax Commission took on statewide political ramifications when the GOP lieutenant governor used the issue to charge the Democratic governor's administration with trying to raise taxes in violation of a no-tax-increase pledge.
The measure had gotten only minor attention in the statehouse until Wednesday night when it was thrown on the frontlines following Gov. Jay Nixon's State of the State speech.
"While Gov. Nixon made a promise tonight to not raise taxes, just weeks ago his tax commission voted to raise taxes on Missouri farmers by almost 29 percent," Lt. Gov. Peter Kinder said. "This is a devastating blow to our agricultural producers after one of the worst farm income years since 1945. In the coming days, Missouri Republicans will move to stop this hike from Gov. Nixon."
Even though the Tax Commission is independent of the governor, Kinder's staff said that because two of the three members are Democrats, Nixon shares the burden of their decision. One of the three members were nominated by Nixon, but Kinder's office said he could've prevented the decision by lobbying the two Democratic party members.
The issue came before the Senate Rules Committee earlier in the week in a resolution to reject the commission's proposal. To officially deny the commission's request, the Missouri Senate and House must pass identical resolutions within 60 days of session starting.
"This will decrease the value of farmland," said Sen. Gary Nodler, R-Joplin, a Rules Committee member. "This is as close to a no-brainer as you can get."
Each Missouri farm is assigned a grade value of one to eight based on the amount of productivity a farmer can draw out of the land. Grade 1 farms have the most desirable land, and Grade 8 farms have the least. These "use values" are then multiplied by both a 12 percent statewide rate and then by a county levy.
The estimates were approved by the commission in December and would raise property taxes on farmland in Missouri ranking grades 1 to 4 by an expected 90 cents per acre, or 29 percent.
The commission rule would raise the property tax on only the higher productive acres of Missouri farmland. Because crops are generally planted in the higher quality plots because of soil nutrients, crop farmers could see a hit to their income.
Representing the Missouri Farm Bureau, Leslie Holloway said agriculture would still see an 11.5 percent increase in total property taxes paid despite the 20 cent per acre decrease in Grades 5 to 7 if the change is made.
The recommendation came from the University of Missouri's Food and Agricultural Policy Research Institute, which the Tax Commission consulted. The institute's recommendation is based on the profitability averages from the past 15 years.
Scott Brown, of the institute, said while the formula takes into account the past 15 years, it's hard to judge what the future may bring to Missouri farmers based on the past.
"Market volatilities are difficult to predict today, but our formula does a good job," Brown said. "This is the first time in years that they have agreed with our assessment to raise taxes."
Sen. Bill Stouffer, R-Napton, pointed to recent crop market volatility as indicating now as a bad time to change the system.
"We are in a time of extreme price shifts on both input and output sides," Stouffer said. "We need a time of tranquility to get back to the averages."
"Now is just not the time," he said.
In the Rules Committee hearing, Sen. Joan Bray, D-St. Louis County, said farmers already have plenty of legislation in Missouri working in their economic favor but was countered by fellow committee member Norma Champion, R-Greene County.
Champion argued that residential and commercial properties are not seeing an increase in tax assessments and neither should agricultural land.
"Farmers are not asking for an exception," Champion said. "All taxes should remain the same."
Rules Committee Chairman and Majority Floor Leader Kevin Engler, R-Farmington, said he would like to have a decision made by next week.
If no action is taken, the increase will be effective Jan. 1, 2011.