While the cuts to the Kansas Department of Agriculture budget are no larger than in other state departments, different changes in legislation and taxation are beginning to hurt Kansas farmers.
Barry Flinchbaugh, professor in agricultural economics, explains that the tax mix – composed of income tax, sales tax and property tax – is changing with the governors’ new tax policy and what legislation passed two years ago to shift taxes away from income taxes. The tax basis is changing from income tax to property tax.
“Nobody pays more taxes than farmers, as an industry,” Flinchbaugh said.
S-178 is targeting how the state appraises farm land for tax purposes. In the past, farm land had been appraised based on the income it produces for the agricultural industry. This bill proposes that land be appraised for market value. This is eliminating what has been known as use-value appraisal.
“This (new tax policy) will increase property taxes for farmers probably $200 million statewide,” Flinchbaugh said.
Farmland close to urban areas has a much higher market value than other farmland because it has the potential to be urbanized.
The state implemented use value appraisal in 1989, completely taking fair market value out of the calculation, according to the Kansas Department of Revenue.
According to Flinchbaugh, the push to go back to the old system of market value based taxes came from the state needing money and the experiment to eliminate income taxes.
When questioned regarding the potential tax changes, the Gov. Sam Brownback’s office directed the Kansas State Collegian to Kansas Agriculture Secretary Jackie McClaskey’s editorial, “Editorial: Kansas Secretary of Ag. McClaskey on Senate Bill 178.”
The editorial said that Gov. Brownback does not support this bill, nor does McClaskey.
Rep. Sydney Carlin, D-Manhattan, said the department of agriculture budget will not be cut more than any other budget. All budgets are being cut by 4 percent in 2015 and by 8 percent in 2016.
Carlin, like Flinchbaugh, is not in favor of the change to market value land appraisal.
“We thought at the time it was a fair formula, and I still think it is,” Carlin said.
Carlin spoke with McClaskey about the 4 percent cut; McClaskey said she will deal with the cuts because she is supposed to. McClaskey explained that one of the problem areas is with high school agricultural education programs.
The department of agriculture has also had to scale back on non-solution and stream bank rebuilding, which is needed to help rebuild and sustain the banks water streams and lakes, Carlin said.
One way the Department of Agriculture is looking at replacing lost funds is by implementing more fees in various places, Carlin said.
Another way to make up for the deficit would be an increase in the cost of water. Tom Sloan, R-Lawrence, introduced H.R. 2014 to establish a clean drinking water fee.
“A lot of programs and state paid services in the state will be scaled back,” Carlin said. “Budgets are not done yet.”
John Floros, dean of the College of Agriculture and director of K-State Research and Extension, is examining all the budgets and how the university will handle the 2 percent reduction in funding.
Research and Extension is not funded by the department of agriculture; however, it does receive funds to support the Agricultural Experiment Stations, which are located throughout the state, and the Cooperative of Extension System, which reaches each county.
Floros said they do not know what will be cut until they receive a final notice from the university. The cuts will mainly impact positions that are not currently filled, and will not be filled again.
“Almost every faculty member we have on faculty teaches, researches and works with extension,” Floros said. “All are intermingled.”
The opportunity to be involved in experiment stations and extension systems helps to support the nearly 360 faculty members in the five colleges, as well as helps K-State bring more teachers and expertise to students and the university, according to Floros.
The department of agriculture’s budget is not being cut any more than other budgets; however, the agriculture industry is being asked to make up a disproportional amount of the shortfall by the changes in appraisal for property tax and the reduction in the budget for higher education.