Hamilton County’s valuation increased by a staggering $603 million this year, continuing a troubling trend that doesn’t add up for long-term financial stability.
Though in some ways the increase in valuation reflects $26 million worth of new, positive growth, the lion’s share ($577 million) of the 2014 increase can be attributed to state-mandated adjustments in ag land values. With land selling for $12,000-$13,000 per acre, as we’ve seen over the last couple of years, the county assessor had no choice but to up the taxable value of farmland throughout the county.
Times have been good for agriculture in recent years, no doubt about it.
Danger lurks, however, when those values rise too far, too fast, without a corresponding link to the land’s ability to generate additional income. With input costs on the rise and corn currently selling for $3.50 a bushel, adding 27 percent to farmers’ property tax bills will be a painful blow.
The dot.com bubble and housing collapse in recent years are prime examples of what can happen when the pendulum swings the other way. Nebraska and Hamilton County were fortunate to avoid much of the fallout from those corrections, though that wouldn’t be the case if ag land values took a sudden turn south.
Elected officials at various taxing entities, including the city, county and area schools, are now busy plugging in their respective valuation totals and will soon set their own individual levies. They should come to the table in the days ahead ready to trim their levies with this concern in mind. Holding the levy at the same level as the year previous, which used to be a barometer for conservative budgeting, would in reality be a sizable spending increase this county simply cannot afford.
Local citizens don’t seem overly concerned with the soaring valuation trend, based on the limited input and feedback shared during past public budget hearings. That concern would grow exponentially, I fear, if land values were to drop significantly, impacting the budgeting process in such a way that the quality and quantity of services we’ve come to expect were suddenly in jeopardy.
Local taxing entities, including the county, city and 4R school, should avoid the temptation to bank on valuation growth that is simply not sustainable.