Committee approves correction to agricultural land valuation rule

The Local Government and Taxation Committee approved an administrative-rule amendment that corrects the formula used to calculate gross income per acre in the agricultural land valuation rule.

Kathleen Ireland, property tax research specialist for the Idaho State Tax Commission, told the committee the docket (30-5-013-2401) amends Property Tax Rule 617, "Agricultural Land Valuation Definitions and Guidelines," to correct a reversed calculation. "The current rule calculates acres per gross income, which is generally unhelpful. So the corrected formula ... is income per acre," Ireland said. She explained the corrected approach uses animal-unit-months (AUMs): multiply the cow-calf pair count by months grazed to calculate AUMs, apply a five-year rolling average of rents per AUM to estimate total AUM income, then divide total AUM income by the number of acres grazed to arrive at gross income per acre. From gross income per acre, allowable expenses are deducted to reach a net operating income that is capitalized into an assessed value per acre.

Ireland also said subsections 4, 5 and 6 had ancillary language removed, and subsection 7 was removed in response to the governor's 0-based regulation directive (Red Tape Reduction Act). She thanked "Mr. Russ Hendricks with the Farm Bureau and the many county assessors ... especially Mr. Bridal Stender," saying they reviewed and approved the changes.

A motion to approve docket 30-5-013-2401 was made on the record and passed by voice vote; the transcript records no roll-call tally. Committee members asked clarifying questions about how locally sourced rent data would be gathered; Ireland said locally sourced questionnaires of ranchers in the assessment area are primary, and if local data are unavailable the rule allows using published third-party sources.

The committee passed the docket without recorded opposition.