To the editor:

As the property tax deadline of Nov. 15 approaches for Minnesota farmers they must ask themselves if they are being abused by the current assessment method. After several years of dropping commodity prices and corresponding farm incomes, how can it be that property assessments don’t seem to be matching this trend! Property taxes are paid with real money and not some blue-sky values having no relationship to net income.

Even agricultural loan officers will not extend credit anywhere close to the values our assessors have placed on our farmland. According to the American Society of Farm Managers and Rural Appraisers, a speculative bubble has formed when farmland prices are too high relative to the agricultural production earnings generated from the use of that land. In other words, a speculative bubble is indicated when the mortgage cannot be paid entirely with the land’s earnings. Our university extension service has been showing for several years now a lot of red ink in crop budgets. It is high time that Minnesota adopts an assessment method that uses real production costs and not some speculative sales figures.

The Federal government saw the wisdom of this approach by passing the Tax Reform Act of 1976. In the act they set up I.R.C. 2032A, which uses rental income as the basis for farmland valuation. If assessment of land reflects speculation to such a degree that the price of land does not bear a reasonable relationship to it’s earning capacity, the Congress believed it unreasonable to require that this “speculative value” be included in land value calculations. The state of Idaho has adopted this reasoning in statute 63-602K and Minnesota should do the same.

Dean Rans

Springfield