Hay bales line a cornfield in Johnson County. PHOTO Carol Highsmith, Library of Congress

Ernie Goss, director of Creighton University's Economic Forecasting Group, is calling for changes to how farms are taxed and how school districts are funded amid continued declines in farming income.

The U.S. Department of Agriculture last month projected that net farm income in 2017 will fall 8.7 percent, marking the fourth straight year of declines.  Despite that downward trend, local taxing bodies throughout the Midwest continue to raise property taxes on farmland, Mr. Goss noted this week.

Between 2013 and 2014, for example, the assessed farmland values for 10 Midwestern states, including Iowa, expanded by 11.4 percent. At the same time, local governments throughout the region increased elementary and high school spending per student by a median of 3 percent. In Iowa during that period, property taxes increased by approximately 2 percent.

"While more recent data are not available, anecdotal evidence indicates this same pattern has continued with lower farm income, higher K-12 education spending, and ballooning property tax burdens on farmland with significantly lower, and even negative, net farm income," Mr. Goss wrote.

In order for farms in the region to be economically viable, Mr. Goss said local elected officials and state lawmakers should push to decrease K-12 education spending, and  base property taxes on farmers' income rather than their estimated or historical farmland values.

He also called for allowing counties to collect local option sales taxes, and changing state funding formulas for education to provide better funding for rural areas.

"Shifting the property tax burden to state sales and income taxes via state aid to local units has not and will not work," Mr. Goss wrote. "Historical evidence shows that cutting property taxes lasts for only two or three years, and that it is followed by excessive property tax growth plus higher income and/or state sales taxes. "

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