Property owners skeptical od ag land tax reappraisals

A Montana Department of Revenue official met with Valley County landowners last Thursday to explain the 2009 tax reappraisals, but those whose taxes jumped still question the process. More than 70 farmers, ranchers, county commissioners and other elected officials spent about three hours at the Cottonwood listening to what DOR management analyst Dallas Reese had to say. They asked questions about the difference between taxes in Valley County and Daniels County, about different carrying capacities allotted on BLM land and private land, and about tax hikes when there was a promise of no tax revenue increase.
Reese delivered a brief history of property reappraisal since the DOR was created by the legislature in 1973. He said ag land had not been appraised for nearly 40 years and some parcels were carrying old, locally made adjustments that could not be justified.
The reappraisal of land value based on soil type, land use and productivity is fair and equitable statewide as required by the Constitution, Reese said.
One good thing with this reappraisal is it is soil-based, and soil doesn't change a great deal over time, he said. There is a long-term average yield to go on.
Soil maps were obtained from the USDA's Natural Resources Conservation Service, which had two soil scientists from Bozeman on hand for the meeting.
To determine land use, the DOR asked the USDA's Farm Service Agency for information on their five classifications: non-irrigated summer fallow farmland, non-irrigated continuously cropped farmland, irrigated cropland, non-irrigated continuously cropped hay land and grazing land. They had to make a Freedom of Information request, the first time one was ever granted to the state. They got information with the restriction that no ownership information or actual use of the land was released. The DOR also used aerial photos, which can show the various land uses.
The FSA said they didn't have information on county yields and wouldn't release information on a farm-by-farm basis. According to the Valley County appraiser, Allen Bunk, the local FSA said they used the Montana Agricultural Statistic Service, which puts the county's average yield of spring wheat at 23.4 bushels per acre. The adjustment factor in Valley County is 53 percent.
State Sen. John Brenden, R-Scobey, rose to take issue with the state's formulas.
"I have the ag land formula. It's a bunch of hooey," he said. "There is no way to get 7 tons to an acre of dry land hay–period."
He said he had a letter from an 85-year-old widow whose tax went up from $2,300 to $4,400.
"We have got to change this. You can't have one person's land go up and the person next to him not."
He went on to frame the skepticism in bold terms and to attack the director of the DOR.
"You've got a tax revolt going here, folks. And Dan Bucks is a disaster."
The assessment notices showing the new values were mailed last September. With a mass appraisal, officials strive to be right 80 percent of the time, Reese said. They received corrections on 10 percent of their appraisals, which means 90 percent were correct. Three percent of the reappraisals are up for review.
"What we have done for reappraisal has been a success," Reese said. "My job was to see how did we do across the state. In general it was a very successful reappraisal."
Valley County Commissioner Dave Reinhardt asked for an explanation of the "county line factor," a variation in land values across a county line, which has some landowners adjacent to Daniels County fuming.
Reese said there is different productivity for each county, so each county has a specific adjustment factor. A 12-year average for a given county is used for the adjustment. He said the DOR doesn't have the means now for a shaded area between counties to get a blended rate. He said the next Governor's Advisory Committee on Agricultural Land Valuation needs to work this out.
The productivity of grazing land was another topic of discussion. The DOR assigns more AUMs (animal units per month) to private land than the BLM does for its leases on similar land. This raises its productivity and value in the eyes of the tax man. Reese said the BLM uses other factors to determine its AUMs, making allowance for wildlife grazing, aesthetics, etc. He also made a distinction between the carrying capacity of land versus the stocking rate (how many animals are actually on the land). He said the DOR factors in a mid-point between average and below-average precipitation for assessment on grazing land.
Rancher Steve Page said there was a difference between the results of an on-the-ground range survey and the DOR's theoretical grazing production factor using soil and rainfall.
"The difference is if a range scientist rates a piece of ground, that is the capacity. Our maps showed a 25 to 30 percent increase by your figures versus our figures. I'm not questioning the way you use your method. I'm saying your method is wrong."
Mike Hansen, the assistant state soil scientist from the NRCS, said a range inventory is not the same as a soil survey, which is the accepted formula.
"A range inventory is based on what's on there today. We can't do that over the whole state," Hansen said.
Reece noted two actions having nothing to do with reappraisal that can affect local taxes. The Federal Energy Regulatory Commission ruled that a pipeline company could deduct an expense, an income approach to property. Lowering the income of the property lowers its value. Montana Senate Bill 469 changed the property class of feeder lines from wells, decreasing their value for taxes. When that happens, the county commissioners still need to generate a budget, so taxes shift to another class of property, making someone else foot the bill.
The DOR maps landowner protests, Reese said, and if an issue becomes apparent in an area, they will call in the NRCS to see if there is a problem with the soil type designation. If there is, they will make an adjustment for the entire county, not just the people who complained.
"We are making adjustment, but we're making them broad strokes," Reese said. "Under the old system, individual adjustment were made for no rhyme or reason and carried 50 years or so.
"We're trying to get a system in place that is reflective of the land's use and productivity. We as a group need to figure out a way to make sure we've got the land classified correctly and get reasonable productivity. The agency can't make changes like this without issues being raised. We have created a system that in my mind is fair. You're being treated with the same methodology and factors as all other farmers in the state. You couldn't say that of the system we inherited. The next reappraisal in 2015 will be better."
At least one producer remained unpersuaded.
"I sat here and listened to the whole presentation and I've gotten more fuel for a class action lawsuit than I would ever have thought possible," said Glasgow area rancher Buddy Cornwell.