By:  Doug Busselman, Executive Vice President

Monday, April 13th the Nevada Tax Commission will be meeting in Carson City and on the agenda is the action item of adopting the assessment instructions for agricultural lands and open spaces.

This matter is a hold-over that has been delayed from the last meeting, partly because of the questions raised by the person writing this opinion piece.  Under the original proposal for the agricultural land values for 2010 and 2011, the increased values ranged as high as 19.2 percent for cultivated lands and over 23 percent for native meadows or wild hay producing property.

Determinations for agricultural land values in Nevada are achieved by an annual survey of producers, who report back on the value of the commodities they produce as well as the yield they’ve achieved.  Even though the level of participation is relatively small, there is believed to be enough data to plug into a long-used formula and come up with “defendable” results used in establishing property tax billing for various classes of agricultural lands.

Higher commodity prices over the past couple of years have resulted in the formula churning out property values that have steadily climbed upward.

During the summer of 2008, although hay prices and other Nevada agricultural commodities were relatively high, a study by the agricultural economists at the University of Nevada indicated that fuel and other energy prices had negated whatever gains might have been achieved from the value of the commodities being sold.  In our reaction to the proposed levels of increases for agricultural land values, we sent the draft economic fact sheets to the Department of Taxation and observed that we didn’t think there was enough evaluation of expenses being contemplated in the formula that they have been using.

After revisiting the numbers and doing some more calculating the revised results are showing what might be much closer to the actual level of ag. land value increases.  Crop lands will be increasing slightly from the 2009-2010 levels (in a range of 4.6 percent to 5.4 percent) and the other classifications for native lands or pastures will actually be slightly decreasing in value.

We’re told that the adjustments were made through the weighting process of how the formal works and we will be sharing our appreciation for these adjustments in testimony to be given to the Tax Commission.

Beyond getting the numbers lower, we have more importantly been assured by the Director for the Department of Taxation that we will be able to work with the Department in examining the formula and process used in making the determinations for agricultural land values.  After the current state legislative process has been survived, we’ll have the time to work on the details of what gets figured and how the figuring is carried out.  As long as the true nature (income and expenses) are identified and properly calculated the end result of the numbers will be whatever they should be.