New bill may change the way agricultural land will be evaluated in State of Nebraska

A new bill may change how agricultural land is valued for tax purposes in Nebraska.
    The bill, LB338, was proposed by Gov. Pete Ricketts and was introduced on his behalf by Sen. Lydia Brasch of Bancroft.
    The bill is called the Agricultural Evaluation Fairness Act. It would base ag land values for property tax purposes on the land’s income potential rather than on sale prices as is currently the case.
    Brasch introduced the bill Wednesday to the Legislature’s Revenue Committee, and Ricketts was on hand to explain the bill himself.
    “This is something that will not only be more fair to our farmers and ranchers, but is more standard across ag states,” Ricketts said.
    Ricketts said that South Dakota, North Dakota, Kansas, Iowa, Illinois, Indiana, Wisconsin and Ohio all use this form of ag land valuation. He said it is a fairer way to put a value on farm land that takes the property tax burden off farmers.
    Ricketts said that if the bill were enacted this year, the total land valuation for Nebraska would drop by 2 percent.
    Ruth Sorensen, property tax administrator for the Department of Revenue, was also at the hearing to help explain the fundamentals of the bill.
    Sorensen said that using income potential would slow the growth of land prices. She said since 2006, total ag land prices have increased 264 percent, compared to only 43 percent for commercial land.
    According to Sorensen, ag land valuation would be based on a capitalization rate related to the value of the land’s use. This is where the bill gets complicated.

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